Guest essay by Eric Worrall
The unfolding Greek financial crisis is front page news. The repercussions – bank runs, unsustainable debts, deadlocked creditors – could easily lead to major consequences worldwide. However misconceived the Euro currency was, its downfall will be painful on a global scale.
How much of Greece’s current economic problems were caused by the made Hellenic dash into renewable energy? The answer, unsurprisingly, is most likely quite a lot.
Greece, like many small European economies, has placed a substantial focus on green energy, seeing it as a quick leg up into the big league – an easy way to attract generous funding from rich green neighbours like Germany. On paper it must have seemed a fantastic opportunity – build green energy infrastructure, using a mixture of easy finance and generous grants from Germany and other rich green neighbours, then sit back and profit from selling carbon credits, on the pan-European, or even a global carbon market.
The promised European carbon market never really manifested, thanks mostly to an embarrassing oversupply of carbon credits – a surplus which was created through a combination of domestic overissuing of carbon credits, and through clever gaming of the defects in the Kyoto accord.
The consequences for Greece of this economic miscalculation have been nothing short of tragic. With money in short supply, Greece has been forced to retroactively roll back generous carbon credits, which has undoubtably bankrupted local investors, and which likely contributed to a sense that investing in Greece is unsafe.
I’m not suggesting all of Greece’s financial problems are due to Greece embracing the false promise of green wealth. But the massive misallocation of resources and domestic green wealth destruction can’t have helped. Greece now stands on the brink of defaulting on a $1.73 billion IMF payment – a payment which Greece might have been able to afford, had they not been lured into squandering billions of Euros of borrowed money, on the empty renewable energy pipe dream.
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bait and switch ?
December 2011
” The idea is simple and smart. Investing in generation of solar energy in Greece, a country where the sun shines a lot – 50% more than Germany – would yield more kilowatt hours in comparison with the same investment in a northern country. For Greece the investment would create new jobs and a strong domestic PV industry. The importing country would be able to achieve its renewable energy target at a lower cost. The savings could in turn be invested in a sector where that country has a competitive advantage. This translates to more GDP growth for all the countries involved.
The aim of the project is to produce up to 10 GW of solar energy generated electricity by providing potential investors with “turn-key” fully licensed projects in specific state-owned site locations, free of any administrative and bureaucratic barriers. The 10 GW of planned PV capacity exceeds daytime national energy demand and will make available a significant amount of energy for export to third countries. The exports to EU Member States can take the form of physical and statistical transfers, until the appropriate infrastructure is constructed, according to the cooperation mechanism provided for by Article 6 of the Renewable Energy Directive (2009/28/EC).”
remember this: “The exports to EU Member States can take the form of physical and _statistical_ transfers”
http://www.neurope.eu/blog/helios-more-project-between-greece-and-germany/
March 2012
“This idea is the brainchild of Finance Minister Wolfgang Schäuble, who first discussed it a year ago with then Greek Finance Minister and current Environment Minister Giorgos Papakonstantinou. The project has since been dubbed Helios. “It will be a state-run company that will establish subsidiaries to produce solar energy,” explained Papakonstantinou. Helios is to cooperate with private investors who could, for instance, set up solar panels in state-leased areas. ”
http://www.dw.com/en/greece-to-revive-economy-by-exporting-sun/a-15819322
March 2013
“the Renewable Energy Sources (RES) Fund deficit, which is expected to grow to 473 million euros by the end of this year and 905 million euros by the end of 2014. This fund is reserved for supporting renewable energy producers in Greece.”
http://www.forbes.com/sites/christophercoats/2013/03/19/whats-behind-the-sudden-solar-surge-in-greece/
May 2013
“Greece and some on the European Commission level still believe in a strong national sector. Some, including EC Commissioner of Energy Gunter Oettinger, have suggested that one day Greece could transport its wealth of solar power to the rest of Europe through sprawling projects like the planned Helios facility. The proposed solar plant would offer 10GW of installed power by 2050. However, much like the wider solar sector across the Mediterranean region, momentum behind the Helios project has faded in recent months as dreams (a $27 billion price tag) collided with reality (Greece’s current economic potential.)”
http://www.forbes.com/sites/christophercoats/2013/05/17/what-happened-to-greeces-solar-surge/
September 2014
“Furthermore, considerable uncertainties exist in the basic economic parameters of “Project Helios”. It is not at all obvious that the PV electricity to be imported by Germany from Greece will be paid on the basis of the feed-in tariff system. The passing of a new law by the German Parliament for this case, as the Greek Ministry “YPEKA” is widely expecting, by adopting a feed-in tariff scheme for Greek solar PV electricity over 25 years with additional charges to the consumers and the economy, by-passing the competitive electricity market is simply not a realistic proposition. Consequently, the only way for “Helios” to go ahead is for imported PV electricity by Germany to be paid through the local competitive electricity market. However, such possibility, regarding the entry of PV power generation in the German and European electricity markets would only be effective by 2020, expecting competitive solar PV power generation costs meanwhile. Consequently, any government expectations for a sizeable contribution of “Project Helios” to Greek debt reduction are totally unfounded. ”
http://www.iene.eu/project-helios-is-not-bankable-according-to-a-just-released-iene-assessment-study-p82.html