The Greek Parliament has approved a new law introducing renewable energy policies for auction design and small projects with stable feed-in tariffs.
Since 2016, when Greece introduced its competitive auction framework for renewable energy and held its first PV tender, the country has awarded more than 2 GW of solar capacity. Awarded projects generally participate in the energy market and provide variable feed-in premiums on top of market prices. The value of these premiums depends on a number of market variables, such as the marginal price, in addition to rates set through competitive tenders.
This policy is still in effect, but at the end of April the Greek parliament voted in favor of a new law (Law 5106/2024) that allows the government to hold auctions for asset owners willing to accept higher energy curtailment rates for their projects. than usual, as well as installations with energy storage systems.
The new policy will come into effect from May 1, but the European Commission will have to approve the new auction system before the Greek government can hold the first tenders.
The new law does not define the percentage of electricity restriction for awarded projects in future auctions. Instead, the new law allows the Greek Ministry of Environment and Energy to separately determine the percentage of electricity curtailment for awarded projects for each new auction. Similarly, the requirements for energy storage systems in future auctions will be defined by the ministry prior to each tender.
This new approach to auctions is intended to help Greece manage the electricity constraint problem. In the first quarter of 2024, the country has curtailed about 4% of domestic green electricity production. However, there are concerns that curtailment will increase sharply in the future, given the current pace of development and the country’s ambitious renewable energy goals.
The new law also ends feed-in tariffs for solar projects up to a size of 500 kW. Developers of such plants with the necessary permits can sign contracts with the Greek renewable energy operator and sell the electricity generated on the electricity market at a feed-in tariff of €65.73 ($71.37)/MWh. Projects up to 1 MW for energy communities or farmers receive a feed-in tariff of €68.87/MWh.
Developers of these projects must have signed agreements with the Renewable Energy Systems Operator by May 31, 2024. After that date, developers must participate in competitive auctions and secure contracts at competitively determined prices.
The extension until December 31, 2024 applies to projects in the Greek lignite mining areas of Florina and Kozani, in the prefecture of Western Macedonia, and to certain projects of farmers or the Greek distribution system operator.
That said, solar farms with feed-in tariff contracts in effect on May 31 or December 31 will also need to be installed and connected to the grid within specific timelines, as Greece appears to be rushing to close this market segment. .
Solar projects in this category may seem small, but they have been the powerhouse of the Greek PV sector for years, adding meaningful capacity and keeping the sector alive.
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