Greece, Croatia, and Italy Chart a Course to More Solar Power

A status update and forecast for solar photovoltaic power in Greece, Croatia, and Italy.

In the wake of the COP21 climate conference in Paris, many nations are announcing plans to reduce future carbon emissions from their energy systems. But the pledges signed in Paris in December 2015 are mainly nonbinding commitments. Though the European Union (EU) has pledged to develop renewables totaling 20% of all generation capacity before 2020 and 50% of all capacity before mid-century (well ahead of China, Japan, and the U.S.), not all EU power policies are created equally.

Many EU nations are actually increasing their reliance on fossil energy, much of it imported, despite large domestic renewable resources.

Each of the 28 member nations enjoys wide latitude to chart its own course. Though the EU is commonly perceived as a model for the clean energy revolution that is needed, wind development throughout much of the region has slowed, and new solar installation has stalled. In fact, many EU nations are actually increasing their reliance on fossil energy, much of it imported, despite large domestic renewable resources. In the process, a growing number of economists and researchers believe the nations are missing out on an incredible economic opportunity as well. Nowhere is this more evident than in the sun-rich but economically poor southern nations of Italy, Greece, and Croatia.

New data projected for 2016 from environmental groups like Greenpeace, research centers like Germany's Fraunhofer Solar Institute (the largest solar energy research institute in Europe), and financial groups like Bloomberg New Energy Finance (BNEF) indicate that solar and wind are increasingly competitive in the south. However, at the end of 2015, the short-term forecast for solar expansion in the region is cloudy at best.

Even as solar achieves grid parity in many regions, only Italy continues to really take advantage of this domestic resource. Prior to the onset of the Great Recession and austerity measures, Greece was moving in that direction as well. But since then, Europe's second-largest lignite coal miner has reversed course, and that country's solar industry has collapsed.

Further north, politicians in Croatia-despite the nation's similar solar potential-are more excited to embark upon a "drill, baby, drill" direction. Just recently, the government there began awarding a handful of exploration and drilling permits for natural gas in the Adriatic Sea while freezing new grid connection licenses for solar installations. Comparing the divergent energy paths taken by Italy, Greece, and Croatia-particularly with regards to solar development-is an object lesson in how disunited the EU really is when it comes to seriously tackling climate change.

Studies of Solar Markets, Prices, Policies, and Potential

According to the International Energy Agency's (IEA's) "2014 Snapshot of Global PV Markets," in Europe, the newly installed solar market continued to decline in 2014, dropping from 22 GW of new solar installed in 2013 to around 7 GW in 2014. 2015 will likely echo that trend. Germany certainly experienced another market decline to only 1.9 GW installed in 2014 with extremely competitive incentives. France grew again to close to 1 GW, while the Italian market, where feed-in-tariffs (FITs) were phased out, descended to a rather low level of 400 MW of new generation. Some established gigawatt markets experienced a complete shutdown over the past few years, with between zero and only a few new megawatts installed, notably Spain and Greece.

However, today Italy, Greece, and Germany have enough photovoltaic (PV) capacity to produce 8%, 7.6%, and 7.0% respectively of their annual electricity demand with PV (even with small installation levels, those numbers may increase slightly by the end of 2015). Overall, PV represents at least 3.5% of the electricity demand in Europe and 7% of peak demand.

According to the IEA's "Trends 2015 in Photovoltaic Applications," at the end of 2014, Germany-a nation that receives as much sunlight as Alaska, had 22% of total worldwide installed PV capacity. Italy had the fourth-largest amount (11%), after China and Japan.

But Italy generates more of its energy from solar than any other nation, with almost 8% of its total energy coming from solar, compared to 6.2% for Germany. By mixing net metering and a well-segmented FIT-plus a lot of sunshine-Italy became a world leader in solar energy, though it has since drastically changed its FIT schemes. "The future growth of the market will depend on the streamlining and harmonization of administrative procedures, combined with an adapted decrease of the FiT to cope with the expected price decrease," as reported by the European Photovoltaic Industry Association.

Since the energy payback time (EPT) of most PV systems is dependent on geographical location, the more sunlight, the better. According to Fraunhofer in its Photovoltaics Report, updated November 17, 2015, currently, PV systems in northern Europe need around 2.5 years to balance the input energy, while PV systems in the south equal their energy input after 1.5 years or less-depending on the technology installed. "A PV system located in Southern Italy or Sicily with certain modules has an EPT of around one year. Assuming a 20-year lifespan, this kind of system can produce twenty times the energy needed to produce it. The EPT for CPV-Systems throughout Southern Europe are often less than one year."

Though southern Europe has great sunshine, "many of the stakeholders, including oil, nuclear and coal fired power plant operators, have been successful in giving PV a reputation as being too expensive. But today it's clear that the solar technology is ready, the costs are in line, there is even in many cases financing at the ready. All that is lacking in Germany and much of Europe is the political will to move forward," said Eicke Weber, director of the Fraunhofer Institute for Solar Energy Systems ISE and professor of physics/solar energy at the Department of Mathematics and Physics and the Department of Engineering respectively at the University of Freiburg, Germany, in a long interview with POWER.

"Instead, we are now seeing markets for new PV take off in Africa and South America-increasingly being led by Chinese and American PV producers and not German firms because of the real collapse of our domestic markets. But going forward, we at the Fraunhofer expect that by 2050, PV will be able to produce clean energy at almost 2 cents an hour. This is why by 2050, we believe PV will go from a world market of 200 GW to 5,000 to up to 30,000 GW. By then PV should be able to cover over 30% of the world's energy needs at only 2 cents per kilowatt-hour. We are at the front end of a very exciting rapidly developing PV market globally, though sadly it has slowed here," continued Weber.

In October, Bloomberg New Energy Finance announced its findings that the levelized cost of energy (LCOE) for wind and solar is now lower than for coal and gas in many regions of Europe.

In October, BNEF announced its findings that the levelized cost of energy (LCOE) for wind and solar is now lower than for coal and gas in many regions of Europe. In fact, renewables are pushing up the LCOE for gas and coal. Seb Henbest, head of Europe, Middle East, and Africa at BNEF, commented: "Our report shows wind and solar power continuing to get cheaper in 2015, helped by cheaper technology but also by lower finance costs. Meanwhile, coal and gas have gotten more expensive on the back of lower utilization rates, and in Europe, higher carbon price assumptions following passage of the Market Stability Reserve reform."

Noting the plunge in solar prices in recent years, the IEA predicts that solar could become the world's largest source of electricity by mid-century, providing about one-fourth of its power. This is a very bold statement considering that in 2013, solar barely accounted for 1%. "By 2040, developing economies will have spent $1 trillion on small PV systems, in many cases bringing electricity for the first time to remote villages," says Jenny Chase, chief solar analyst at BNEF. Her group forecasts that by 2030, new onshore wind and solar energy will be cheaper than new or existing fossil fuel plants.

Several new studies funded by Greenpeace and other environmental groups suggest that by failing to re-stimulate their moribund solar and renewable energy sectors, Greece, Croatia, Italy, and other southern European nations are moving in the wrong direction, missing a grand opportunity to create thousands of domestic jobs and reduce foreign energy dependence. Dejan SaviA, coordinator of the solutions for Mediterranean project at Greenpeace CEE, said, "If we're honest about the economic challenges in the region, we can be honest about the abundant renewable energy potential here. Building renewable energy capacity, which guarantees new jobs, enhances a new sustainable economy, protects ecosystems and mitigates climate change is a no-brainer and it's time political leaders see it."

Another study, this one by a team of engineers and researchers at Stanford University led by Mark Z. Jacobson, a professor of civil and environmental engineering and director of the school's Atmosphere and Energy Program, found that Greece, Italy, and Croatia, along with 136 other nations, could meet all their energy needs from renewable wind, solar, and wave and water sources by 2050. As a follow-up to its 50 U.S. state plan, the "Solutions Project" has come up with a detailed evaluation of what it would take to move nations to 100% renewable and how many jobs would be created in the long and short term.

But Greenpeace and the Solutions Project's goals are often challenged by other "green" factors, including, of course, available funding for these projects and concerns about how a continued march in the renewables direction will affect the overall economic health of each nation. But what seemingly holds the transition back are political forces bent on protecting investments already in the (pun intended) pipeline.

Greece's Solar PV Market Overheated in the Fierce Hellenic Sun

Initial development of solar power in Greece started in serious in 2006. Installation rates quickly took off in 2009 because of the Greek government's introduction of a very generous (perhaps too generous) set of FITs and favorable regulations for domestic applications of rooftop solar PV. In 2012 providers installed over 890 MW of solar PV, followed by another 1,092 MW in 2013.

This 19.96 kW solar PV plant at the Ethel depot in Tavros, Greece, was installed in 2009. Courtesy: PPC Renewables

But throughout the worsening economic and political crisis, the sunny nation only installed 16 MW of new solar PV in 2014. According to a Hellenic Electricity Market Operator SA (LAGIE) report published in early 2015, by then Greece had cumulatively installed 2.596 GW of solar PV. Throughout the rest of 2015, Greece's solar PV industry continued to struggle as only a trickle of new installations came online, bringing the new total installed capacity to less than 3 GW. The Balkan republic has to source 18% of its total power from renewables by the end of 2020 under EU rules.

One reason for the sudden rise and collapse of the industry was the aforementioned generous FITs. Once those were removed, as one government after another collapsed, investors decided to wait out the storm. According to PV Magazine's public policy correspondent, Ilias Tsagas, the former, more conservative Greek government "correctly" stated that those initial investors indeed received among the highest public subsidies in the world. "Most of Greece's main PV stakeholders have confirmed to PV Magazine that the internal rate of return (IRR) for PV plants in Greece before the retroactive cuts [were implemented] exceeded the European average by quite a bit."

Since 2014, several governments have revamped that incentive program, and going forward it will be based on a different, though still generous, net metering program. Greece's Electricity Distribution Network Operator announced earlier this year that it would commence accepting applications for PV net metering systems to connect directly to the medium-voltage electricity network at the end of October 2015.

Net metering in Greece now is a stronger incentive for the installation of solar PV than FITs, said Stelios Psomas, policy advisor at the Hellenic Association of Photovoltaic Companies. Psomas told PV Magazine's Tsagas that current residential FITs are 0.115 a/kWh, while according to the organization's calculations, net metering offers around 0.13 a/kWh of savings. In the commercial segment, Psomas added, today's FITs are between 0.063 a/kWh and 0.069 a/kWh, while net metering saves businesses approximately 0.09 a/kWh to 0.12 a/kWh.

Unless and until Greece stabilizes economically, it will be far easier for energy policies to be established from outside the nation.

Either way, the main challenge for Greece is its ongoing dire economic situation, particularly the recent round of capital control restrictions imposed on all bank transactions beginning in July. These rules simply restrict businesses from growing and end up generating additional uncertainty for investors. Unless and until Greece stabilizes economically, it will be far easier for energy policies to be established from outside the nation.

That is effectively what has happened, as the nation has received loans and incentives to modernize aging coal- and oil-fired plants, to convert some to coal or natural gas assets, and to build expensive brand new coal- and oil-fired power plants as well. Indeed, it's proven much easier to give incentives to older, struggling but established industries than to grow green energy throughout the nation.

Environmental groups like Greenpeace claim that the troubled country's dependence on imported fossil fuels is "one of the most unacknowledged causes of the Greek crisis," since the nation's oil dependence requires constant debt service. At the end of July, Greenpeace activists staged a protest on the island of Rhodes, in the Aegean Sea, near where a new oil-fired power plant is currently under construction. The IEA reported in 2012 that, unlike most of the developing world, let alone Europe, oil accounted for "some 45% of the country's total primary energy supply."

Adding fuel to Greenpeace's fire, the IEA noted that "almost all the crude oils used in Greece are imported" from either former Soviet Union nations as well as members of the Organization of Petroleum Exporting Countries. The former conservative Greek government signed a preliminary agreement with Russia that would see the two countries cooperate on a pipeline that would export Russian gas to Europe through Turkey and Greece. Like many other nations, including Croatia, Greece is also trying to explore whatever offshore or domestic oil and gas deposits it may have.

Croatia's Green Dilemma

Croatia's energy market operator (HROTE) reported in early January 2015 that energy developers had installed 339.25 MW of wind, 33.275 MW of solar PV, 12.135 MW of biogas, 7.69 MW of biomass, and 1.48 MW of small hydro power. Croatia targets a minimum 20% renewable energy sources in total final energy consumption by 2020.

Croatia's current National Renewable Energy Action Plan envisages only a tiny 52 MW of solar PV to be added by 2020. In stark comparison, the target for wind is 1.2 GW across the same period.

Though this is a massive jump since December 2012, when the small Adriatic country had installed a mere 89.72 kW of solar PV, Croatia's PV sector is unlikely to experience another dramatic increase, at least not any time soon. That's because sources confirmed to PV Magazine and POWER that Croatia's energy market operator did not provide any new licenses in 2015 for solar projects, and it's unknown if they will do so for 2016, leaving the PV future in this sunny country looking rather gloomy. In fact, Croatia's current National Renewable Energy Action Plan envisages only a tiny 52 MW of solar PV to be added by 2020. In stark comparison, the target for wind is 1.2 GW across the same period (though only about 250 MW of wind had been installed through 2014). Croatia's energy system continues to be dominated by several large fossil fuel and aging hydro facilities, and only 10% of its power comes from renewables.

Earlier this year Luxor Solar, a German solar modules manufacturer headquartered in Stuttgart, announced that it would build a 360-kW greenfield solar park in Croatia in the spring "before the relevant license becomes invalid." At the end of 2014, Luxor Solar had installed another project of similar size but noted that these would likely "be among the last of its kind in Croatia as green-field systems will no longer receive sufficient support in this sunny country." Other producers and installers also rushed to secure and finish their projects during 2015 as well.

Perhaps one of the reasons why Croatia has decided to curtail new development of solar is actually due to solar's success.

Perhaps one of the reasons why Croatia has decided to curtail new development of solar is actually due to solar's success. At the end of 2012, Croatia had installed only 89.72 kW of solar PV capacity and a generous 141 MW of wind. The 30-plus MW of new solar added since then may have given HROTE a reason for caution to see if, indeed, the nation grid could maintain its integrity as solar and other renewables come online. The only question is how long the freeze will last.

In the meantime, in September 2015, the government was set to sign contracts with two energy groups that have been granted the right to explore and drill for oil and gas in the Adriatic for a period of up to 30 years. "It is a very important project for Croatia," Barbara Doric, head of the hydrocarbon agency told AFP. By exploiting additional resources, "which we assume we have in the Adriatic, it will enable the country to become energy independent and, when it comes to gas, even to become an exporter," she said. Two licenses have been awarded to the INA oil group-jointly owned by the Croatian state and Hungary's MOL-and one to Italy's ENI and MEDOILGAS.

Also in September, Croatia's government adopted a new bill on renewable energy sources (RES) that could lead to important regulatory changes, resulting in a comprehensive reshuffling of rules in this field, said the country manager for Croatia of Austrian privately held power producer RP Global. The bill on RES and high-efficiency cogeneration was adopted by the government in Zagreb in a bid to unify and harmonize regulations in the RES sector. The stated goal is to boost the production and use of renewable energy in the country as well as to fully align domestic rules with EU law. Though the bill provides the regulatory framework to plan and incentivize the buildout of more green energy while offering greater security to RES investors, according to the HROTE, very little has been announced since September regarding new projects. It remains to be seen whether it will be implemented properly, as a number of key bylaws need to be adopted in order for the new framework to be fully effective.

However, according to studies commissioned by Greenpeace Croatia and other environmental groups, if Croatia were to invest 13 billion euros in new power plants, the nation could fully turn to its own renewable energy sources and achieve energy independence, open a large number of new jobs, and attract new investments, all while preserving the environment. The scientific study was presented by Greenpeace Croatia, reports Poslovni.hr on November 27, 2015.

This study, conducted by academics and the Green Energy Cooperative, hopes to give impetus to the transformation of the Croatian energy sector and speed up the move from fossil fuels to 100% renewable energy sources by mid-century, said Marko GregoviA from Greenpeace. The researchers found that after investing 13 billion euros in new plants using solar, wind, water, and other natural resources, energy imports would be significantly reduced, which would save 4 to 5 billion euros a year, GregoviA said.

Edo JurkiA from the Green Energy Cooperative claims that the impact on GDP growth would be fourfold compared to the increase in the price of the energy system, and 65,000 new jobs would be created. At the same time, emissions of carbon dioxide would be reduced by 1.9 million tons, and the money saved could be used for other investments and creation of additional jobs.

Similar studies conducted by Dr. Jacobson at Stanford and the Solutions Project suggest the same outcome. Moreover, in partnership with Croatian developers, the German Fraunhofer Solar Institute has been working to create a large solar module production facility with partners in Croatia that would also lead to widescale solar development.

As part of a development project pursued in conjunction with the Fraunhofer Institute, German entrepreneurs are willing to invest over 700 million euros to produce solar panels locally in Croatia and create a domestic solar industry in the sunny nation. The Vallis Solaris project, which aims to build up a simple, vertical PV production chain and thus establish local PV activity in sunny European countries without the need for a FIT, has been in development for over five years. "Though I'm still hopeful we'll put it through, it's still too early to tell if the Croatian government will approve," said Fraunhofer's Weber. "We do offer quite decent economic support for a region that has a lack of good green investment projects. We have the cost effective technologies right in front of us to put tens of thousands of people to work," said Weber.

The Fraunhofer analysis shows the benefits of using renewable energy in individual sectors that are of particular interest to Croatia, such as tourism (sustainable hotels, apartments, and islands), education (self-sufficient schools), and agriculture (sustainable family farms). The renewable energy plants are particularly suitable for less-developed regions, such as the very scenic Adriatic islands and Slavonia. Indeed, as this reporter can attest to, wildfires over the hot summer knocked out generation at several coastal power plants and caused widespread outages in the middle of high tourist season. The fragile grid was unable to compensate, and thousands of travelers were forced to delay or abandon their holiday plans, costing the nation potentially millions of euros. More local power could potentially prevent such problems.

This 1-kW PV installation at the National Park Brijuni in Croatia was installed by Luxor Solar in 2013. Courtesy: Luxor SolarSunny Italy Reinvests in Solar

As noted above, Italy is, surprisingly, the world leader in installed solar power as a percentage of total generation capacity. In 2015 an estimated 19 MW of PV produced approximately 8% of the sunny nation's total electricity. Indeed, though Germany and China have more total installed and generating power, solar is a smaller percentage of overall capacity. (According to a 2015 IEA report, at the end of 2014, Italy accounted for 11% of worldwide PV capacity, while the U.S. accounted for 10% and Greece accounted for 1%; Croatia was included in "Other.")

In May 2014, Martifer Solar delivered one of the first unsubsidized solar power plants in Italy for the Ikea Group on the rooftop of a new commercial store in Pisa, Tuscany. The project has a total capacity of 696.15 kW and was structured without a feed-in-tariff. Courtesy: Martifer Solar

However, according to The World Bank, Italy is still heavily dependent on imported fossil fuels-importing a net 77% of its energy in 2013. Historically, Italy has depended on fossil fuels and hydrocarbons supplied from North Africa, the Middle East, and Eastern Europe. Ironically, it is now becoming dependent on some of those same countries where renewables are concerned as well. Though large Italian energy firms like ENEL SpA, Italy's biggest utility, and other providers are ramping down the rate of renewable development at home, they are moving aggressively to build out power systems in neighboring North Africa as well as Kenya, Brazil, and across the Middle East.

Overall, Italy had a cumulative installed PV capacity of 18.64 GW at the end of 2014, according to data shared by power grid operator Terna SpA. The meteoric rise over the last five years in solar construction has brought in nearly a50 billion in investments as some 17 GW of new PV capacity came online over that period. Today the industry directly employs well over 100,000 people. But the rapid rise in solar PV installations through 2014 also led Italy's government to curtail additional subsidies and FITs at the beginning of 2015. Despite this, however, at least 244 MW of new PV systems were installed in Italy through the first 10 months of the year, according to Terna. Of this new capacity, 28.22 MW was installed in October, while in September, August, and July new PV capacity of 30.53 MW, 21.96 MW, and 30.43 MW was installed respectively.

Overall, Terna reports that Italy's renewable power plants produced enough power in 2015 to meet almost 30% of the country's total electricity demand.

Overall, Terna reports that Italy's renewable power plants produced enough power in 2015 to meet almost 30% of the country's total electricity demand. Excluding hydropower, the share of wind, solar, and geothermal energy sources was a bit over 14.9% through the end of November. Meanwhile, thermal power plants produced 56.4% of Italy's power.

Though it seemed for some time that Italian politicians were slowing solar development, others decided this was a perfect time to reinvest. In November, Enel announced plans to merge with Italy's largest renewable energy provider, setting the stage for the creation of the first green super utility. Weeks before COP21, the company announced that it had decided to repurchase its former Green Unit, the same renewable energy developer it sold to the public in 2010. By integrating a business whose earnings are booming, the deal allows Enel to tap the quicker growth of its green power unit.

In the process, Enel SpA Chief Executive Officer Francesco Starace plans to create the world's first major clean energy company with the 3.1 billion euro ($3.3 billion) buy-back of its renewables unit. "It will become a very large integrated renewable energy company, which today does not exist," said Starace in a Bloomberg television interview. In the weeks since, while quiet domestically, Enel has announced plans to build new wind and solar farms across the developing world, including over 1 GW of solar-powered microgrids in Kenya spread across dozens of remote villages.

While Italian power companies use solar PV technology to introduce electricity to regions that still don't have it, solar businesses domestically are struggling with the loss of their lucrative FITs. In Italy, of course, it's illegal to install solar power on any characteristically historical buildings. So along the edges of the old cities, you often find the most innovative solar developments.

In famously foodie Bologna, the nation's third-largest fruits and vegetable market, the Centro Agro-Alimentare di Bologna, or CAAD (the Agri-Food Center of Bologna) conducts hundreds of millions of euros of business annually under a giant solar-paneled canopy that's almost 15 football fields large. Housing more than 200 fruit and vegetable sellers, and with produce from more than 100 individual farms, the power plant uses 43,750 solar panels to generate over 11.35 GWh annually. Since the CAAB only requires 3 million kWh, in the past, the remainder went onto the national grid, generating a nice return for CAAB investors.

The canopy of Bologna's fruit and vegetable market, Centro Agro-Alimentare di Bologna (CAAD), consists of 43,750 solar panels with a total area of 100,000 square meters, equivalent to 14 football fields. Courtesy: CAAD

However, with the FIT gone, CAAB had to find new ways to keep itself profitable. The solution: a fleet of electric vans and cars to deliver fruits and vegetables to restaurants and customers deep inside the city. With battery storage still quite expensive, the electric vehicles become mini-batteries and can discharge while providing value-added services. Even better, the clean electric vehicles are able to operate downtown without paying the same operating fees as conventional ones. Their small size allows them to navigate Bologna's ancient streets. Today, solar-powered electric horseless carriages perform essentially the same timeless tasks as fruit peddlers in their mule-driven wagons and, later, diesel exhaust-belching trucks once did. Only now they do it without the poop or the pollution. Perhaps that's progress.

-Lee Buchsbaum (www.lmbphotography.com), a former editor and contributor to Coal Age, Mining, and EnergyBiz, has covered coal and other industrial subjects for nearly 20 years and is a seasoned industrial photographer.

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