Crisis bloats electricity sector debt in the Med
Following the path of Italy, Spain and Portugal, the Greek Transmission System Operator is also entering a phase of crisis, after years of profitable operation. In March 2011, the Greek Operator reported a deficit of €100 mi., which more than doubled within only one year, and is expected to reach €400mi by the end of 2012.
This so-called “black hole”, that is putting at risk Greece’s ability to afford fuel imports, has been attributed to various reasons, such as the low revenues from the emissions permits auctions, the “distorted” calculation method of the RES duty (paid by the end consumers), the crisis-related recent phenomenon of unpaid power bills (also due to a high property tax that was introduced in the bills) and the inability of power suppliers to pay back the Operator. The latter resulted in the permit suspension of two supply companies in January 2012 which served a total of 220,000 customers, i.e. 8% of the electricity market, leaving behind a debt of €150 million.
A main point of controversy has been the support to the RES power producers through the feed-in-tariff system, since it increases the cost of power generation, especially at high productivity periods (in June 2012, new PV installations and the high levels of solar radiation were said to have added €50 mi. to the Operator’s deficit). However, a number of specialists in the energy field (National Technical University of Athens, Athens Chamber of Commerce, the Foundation for Economic & Industrial Research, Greenpeace, WWF Greece and others) have strongly argued that increasing the share of renewables in the country’s energy mix is only of benefit for both end consumers and the economy, while only a small proportion (around 40%) of the RES duty actually goes to the support of RES power producers. In the same time, the State has been subsidizing fossil fuel power generation by €1,5 bi., only in 2011.
The Troika has recommended various ways out of the current situation (increase in the RES special duty paid by consumers, increase in electricity prices, taxation on lignite use, a reduction in the feed-in-tariffs and also a switch from the f-i-t model to a feed-in-premium on). Indeed, the Greek Regulatory Authority for Energy announced on August 9th the upward adjustment of the RES duty (ranging from 30-90%, depending on electricity consumer category).
Similar recommendations have been made in order to decrease Portugal’s “tariff deficit”, while in Spain subsidy cuts are expected to be followed by additional charges for the Spanish RES producers, as announced by PM Rajoy. Naturally, the Spanish RES industry reacted, stating that “it is clear that the Spanish Government needs to tackle its deficit. But to impose a discriminatory tax against a world-class domestic industry makes no sense and could ultimately lead to a loss of tax revenue from companies and employees, and undermine the economic growth which Spain so desperately needs”.
The “very generous” incentive scheme has also taken the blame for the distortions in the Italian power market, as well as for increases in electricity prices.
Sources: European Energy Review, PV Magazine.