Bloomberg News

Greece Plans Revenue Tax for Solar Plants to Cut Deficit

November 07, 2012

Greece is planning to approve a tax on existing solar power plants of 25 percent to 35 percent of revenue to reduce a deficit related to clean energy.

The government included the tax cutting the revenue for all photovoltaic plants in its bill of economic measures scheduled for a vote tonight in the parliament in Athens, a draft of the legislation shows. It covers all solar power plants bigger than 10 kilowatts during two years.

Greece, which has spent about 370 million euros ($473 million) on clean energy subsidies, is joining Spain, the Czech Republic and Bulgaria in raising taxes on solar facilities already built. Plants with about 700 megawatts were completed in Greece this year, bringing to 1.3 gigawatts the total installed capacity.

“This very sudden tax will create cash flow problems for most plants and threatens investments planned for 2013,” said Stelios Spsomas, policy adviser for the Hellenic Association of Photovoltaic Companies, the industry’s lobby group. The bill can’t be withdrawn though the tax rates could be reduced before the vote, he said.

Solar plants connected to the power grid from 2007 to 2011 will see their revenue cut by 25 percent, and those connected from January to August this year will be slashed by 35 percent, according to the draft. In addition, projects permitted in this period will be taxed by 29 percent to 35 percent and will need to be connected by mid-March, earlier than previously planned.

Greece, whose financial crisis began in 2009, has the European Union’s highest feed-in tariffs for solar power. These premium rates have led to an a surge in installations that can’t be sustained, according to Bloomberg New Energy Finance.

“PV growth in Greece subsidized with costs which are not effectively passed onto customers has been the Minotaur of the Greek economy rather than the bull,” Martin Simonek, solar energy analyst for BNEF, said by e-mail. “It had to be killed at some point and the bigger it got, the more drastic measures were anticipated.”

To contact the reporter on this story: Marc Roca in London at mroca6@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net


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