Law 4759/2020, in articles 155-168, introduces certain rules aiming to address the deficit of the RES special account, which finances the income of electricity producers who operate RES projects.

ELAPE’s deficit has been a long- lasting problem, threatening the stability of the electricity market. Over the past years, the deficit has increased by the excessive remuneration schemes for the operation of older photovoltaics dating back to 2012, as well as the excessive subsidies provided for the construction and installation of PV stations at that time. The measures applied to resolve the deficit up to now, targeted mainly to the gradual increase of the Special Duty of Greenhouse Gas Emissions Reduction (ETMEAR).

Nowadays, the deterioration of the deficit has primarily emerged from the decline of the System Marginal Price (SMP), which is the wholesale market price of electricity and the price of CO2 emission allowances. Particularly, revenues from SMP dropped, as a result of the great reduction of gas prices, whereas revenues from emission rights have fallen mainly due to the reduction of the lignite production.

The main provisions of the enacted Law include among others:

– The imposition of a one-time special contribution for the year 2020, to RES projects and CCHP (Combined Cool Heat and Power) projects that have been put into operation before 31 December 2015. This contribution will be equal to 6% of the RES projects’ annual turnover for the year 2020.

– The imposition of a one-time fee imposed on RES producers and electricity suppliers, equivalent to 2EUR / MWh for the year 2021.

– A “green tax” imposed on the consumption of diesel fuel equal to 30 euros per liter.

– The suspension of operating aid agreements for RES and CCHP projects, with the exception of wind and photovoltaic stations with installed power or maximum power output greater or equal to one (1) megawatt (MW).

– Amendments of Law 4414/2016 and L.4513/2018 regarding the participation of RES projects in competitive bidding procedures. Law foresees that for the new applications for a final connection offer from photovoltaic stations, submitted from 1.1.2020 and for all pending applications to be fulfilled after that period, operating aid agreements will be concluded only after their participation in a competitive bidding process.

Overall, the contribution of 6% for RES projects can be considered as an obvious measure to reduce ELAPE’s deficit. However, it might probably affect RES investments and question investment security. It also remains to be seen if its implementation can contribute to the actual mitigation of the deficit or if it will only lead to limited short-term effects as far as its management is concerned.

Moreover, the fee imposed both to RES producers and electricity suppliers could halt their participation in the bidding procedures and additionally discourage RES investments. However, the operation of the Hellenic Energy Exchange S.A (“HEnEx”) provides a leverage to energy companies so that they can mitigate the risks linked to price volatility. Particularly, the tools provided by HEnEx promote contractual flexibility for market participants and therefore reinforce beneficial agreements between parties.

As far as the imposed “green tax” is concerned, it is a positive measure aiming to support “green” projects that contribute to the reduction of CO2 emissions, subsequently supporting the development of RES projects and the sector of e-mobility in general.

In conclusion, the suspension of operating aid agreements and the increase of the competitive bidding procedures, can be considered as good steps towards a liberalized and competitive energy market. In the early years of RES penetration in the electricity supply mix, fixed tariffs and special aid schemes were introduced as a way to boost RES expansion. However, these measures were applied based on the higher costs required for RES investments and are now gradually de-escalating due to the reduction of those costs. Through the expansion of competitive bidding procedures, all RES projects selected through tenders, will have the chance participate competitively in the electricity market in compliance with the requirements set by the newly introduced target model.

Edited by Dafni Sotirchou