Greece Expects $27 Billion Solar Plan to Advance by Year-End

Greece’s Energy Minister George Papaconstantinou said he expects an agreement by the end of the year that will advance a 20 billion-euro ($27 billion) solar power project, part of an initiative to boost the economy.

Papaconstantinou said he plans to sign a pact with European Union officials and renewable energy companies that will help deliver Project Helios, named after the Greek god of the sun, which envisions luring foreign investors to install as many as 10 gigawatts of solar panels in Greece.

“I have spoken with three German ministers now on the project as well as with the EU, and I’m optimistic we can get a framework agreement by the end of the year,” Greek Energy Minister Papaconstantinou said in an interview in Athens today.

His remarks during a trip by German Economy Minister Philipp Roesler are part of a plan to revive the Greek economy, which may shrink more than 5 percent in 2011 as the government slashes spending to avoid a default on its bonds.

Roesler is due to sign accords this afternoon outlining German-Greek cooperation on cutting bureaucracy, backing renewable energy and aiding tourism. More than 70 company officials, mainly from the energy industry, traveled with the minister.

Renewable Growth

German Finance Minister Wolfgang Schaeuble has suggested that Greece, benefiting from relatively strong solar radiation and Europe’s highest premium for photovoltaic power, should look to its renewable energy industry for growth opportunities.

Pietro Radoia, an analyst at Bloomberg New Energy Finance in London, said while Helios’ 10-gigawatt target is realistic, several questions about it remain unanswered.

Exporting solar power to Germany, for example, would be relatively expensive and technically difficult, he said. Since Germany has more than 20 gigawatts of domestic peak solar capacity, “it would also be like bringing wood to the forest,” he said.

There may be financial limitations to a solar boom in Greece, Radoia said. “I’m not sure the government will have the money to pay for a feed-in-tariff that’s guaranteed for 20 years,” he said.

Europe’s solar industry is ready to contribute 5 percent of the estimated 20 billion euros of investments needed for Helios, with EU funding to account for the remainder, Frank Asbeck, chief executive officer of Solarworld AG, Germany’s largest panel maker, told reporters in Athens.

Planning Hurdles

The country needs to remove bureaucratic hurdles by speeding up planning and permitting processes to unlock Greece’s “enormous photovoltaic potential,” Asbeck said.

Last month, Greece said it would put three solar projects worth 1 billion euros on a fast track for approval. They include the 200-megawatt Kozani plant, to be developed by Public Power Corp. SA, a 131-megawatt plant by Solar Cells Hellas Group and Silcio SA’s 127-megawatts project.

Greece may add as much as 498 megawatts of solar capacity this year, more than three times the level in 2010, according to estimates from New Energy Finance. More than 200 megawatts were installed through August, according to the Hellenic Association of Photovoltaic Cos., an industry lobby. Germany, the world’s biggest market, installed 7,400 megawatts in 2010.

Solar PV projects in Greece earn 35 euro cents to 40 euro cents per kilowatt-hour. Germany pays 21 cents to 29 cents.

Greece should reduce its feed-in-tariff to about 28 cents, Asbeck said. That would “sort the gold diggers from the serious investors,” he said.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE