The representatives of five of the biggest companies operating in the photovoltaic sector in Greece (EXEL GROUP, HELIOSPERA, ALUMIL, MECHATRON, NOE/ALUSET) presented a coherent and thorough proposal for the introduction of specific economic incentives to photovoltaic investors, who choose locally produced equipment (local content requirement bonus). This proposal was prepared in light of the legislative proposal to be submitted by the Ministry of Environment, Energy and Climate Change to the Greek Parliament and addresses an issue long discussed and considered by other Member States, as well.
The Law Firm ¡®Metaxas & Associates¡¯ was assigned by the abovementioned Greek companies to deliver a legal opinion on the matter analyzing the main legal aspects of the adoption of a relevant regulation by the Greek Ministry of Environment, Energy and Climate Change. Metaxas & Associates shares with InterPV magazine the main conclusions of the legal opinion.
By Metaxas & Associates
The latest legislation about Photovoltaic and Renewable Energy Sources adopted by the Greek Parliament in May 2010 (N. 3851/2010, ¥Õ¥Å¥Ê 85A, 4-6- 2010) simplifies some of the procedures of the previously existing licensing regime. The law aspires to enable Greece to be provided nation-wide with electricity stemming from RES (by 2020) up to a percentage of 40%. Certain provisions of the abovementioned law were amended by the most recent Law 4001/2011, in force as of August22, 2011. Apart from these, mostly general provisions, a set of more specific procedures is provided for in the Licensing Regulation by the National Regulatory Authority (R.A.E.) and also in certain Ministerial Decisions (such as 9154/14.04.2011 on the prerequisites for the implementation of a photovoltaic station on land and buildings) as well as important internal circulars (such as ¥Ô.¥Á.¥Ð.¥Å./¥Õ1/¥ï¥é¥ê.26928).
The specific licensing procedures and steps for photovoltaic stations depending on their capacity are presented below:
Photovoltaic Stations with Installed Capacity ¡Ã1 MW
An investor aiming to operate a photovoltaic station with installed capacity ¡Ã1 MW should follow the steps below:
1. Apply to the National Regulatory Authority (RAE) for a Production License.
2. Once the Production License is acquired, apply to the competent Department of the
Region for an Installation License (includes Approval of Environmental Conditions).
3. Obtain permission to proceed with minorscale-interventions from the Department of Urban Planning.
4. Apply to the System Operator for grid connection.
5. Sign a contract with the System Operator (HTSO) for the sale of electricity to the grid. Install PV system.
6. Apply to the competent Department of the Region for an Operation License.
The Production License is issued by the National Regulatory Authority (RAE). The NRA examines if the criteria provided for in the Law are met and decides whether to issue or not a Production License within 2 months from the application submission date, provided that the application folder is complete, otherwise, from its completion. The competence of the Minister of Environment, Energy and Climate Change (MECC) consists of an own-motioned examination of legitimacy within twenty (20) days from receipt of the file. This own-motioned examination practically means that the MECC is entitled to cancel the License issued by the NRA in case the latter has been issued in breach of the applicable law provisions. Upon the conclusion of the control by the MECC, the NRA¡¯s License is published in a special Registry kept by the newly established authority for RES within the Ministry. The Production License is valid for up to 25 years and can be renewed for another 25 years. If the Installation License is not issued within 30 months of the issuance of the Production License, the latter is being automatically revoked.
Exceptions from the Production License can be granted up to the point of time when the said license is issued, for stations meant to be operated by farmers up to 100 KW, as well as for stations which are being expressly exempt from the obligation to possess a Production License. Moreover, according to the new Law, a Production License or any other declaratory decision (known as ¡®exception¡¯) is no longer required for photovoltaic systems up to 1 MW.
Upon issuance of the Production License, the investor shall simultaneously a) apply to the Grid Operator for connection quotation, b) apply to the competent authority for an Approval of the Environmental Conditions of the project (E.P.O.) and c) apply for a permit from the Forestry Department, if required. Within 4 months of the submission of the relevant application, the competent Operator will issue the connection quotation, which becomes binding from the point of time at which either the EPO or the exemption decision are issued (see below for more details). Within 45 working days (at the latest) of the submission of the relevant application, the General Secretariat of the Region issues the Installation License. If no such license is being issued, the General Secretariat of the Region shall issue a declaratory decision, explaining why he could not issue the said license and passes the file on to the Minister of Environment, Energy and Climatic Change, who shall issue the said decision within 30 days upon receipt of the file. The Installation License is valid for 2 years and can be renewed once for another 2 years.
After receiving the Production License from the NRA, the investor shall apply for the issuance of a Decision of Approval of Environmental Conditions (E.P.O.), in order to be granted an Installation License. The application shall be followed by a complete folder and an Environmental Impact Statement (E.I.S.). The competent authority examines the environmental impacts and the proposed mitigation measures and issues its opinion on whether to issue or not an E.P.O. decision within four (4) months from the time the folder was considered complete. This decision on environmental compatibility (E.P.O.) is valid for 10 years and can be extended twice for the same period of time, if a relevant application is submitted up to 6 months before the expiration of the said decision.
The competent authority for the Operation License is the same as for the Installation License. It is granted after an audit unit has confirmed that the technical conditions for the installation of the PV station have been observed. The ¥Ïperation License must be issued within an exclusive period of 20 days and is valid for 20 years.
Photovoltaic Stations with Installed Capacity ¡Â500 KW
Regarding the licensing procedures for photovoltaic stations with installed capacity up to 500 kW, one shall note that, under the legal framework as it currently stands, these stations are exempt from the requirement of a Production License, as well as from the requirement of an Installation and Operation License. Moreover, for PV systems up to 500 kWp, installed on fields, the environmental licensing (E.P.O.) can be avoided, as long as certain conditions are met. The District Administration can confirm that these conditions are met within 20 days. In general, an environmental licensing is required only when these systems are to be installed in NATURA areas, coastal areas (less than 100 m from the coastline) and in fields close to another PV plant, which already has been licensed to produce electricity (and the total energy output exceeds 500 kWp). However, the application for a connection quotation to the competent Operator is a sine qua non prerequisite and a guarantee equal to 150 ¢æ/KW is payable before signature of the Power Purchase Agreement.
Photovoltaic Stations with Installed Capacity between 500 kW and 1 MW
Photovoltaic stations with installed capacity between 500 kW and 1 MW are exempt from the requirement of a Production License as well as from the requirement of an Installation and Operation License. However, they are required to apply both, for environmental licensing and a connection quotation. Regarding these stations, the investor shall pay a guarantee equal to 150 ¢æ/KW before signing the Power Purchase Agreement.
As far as the transfer of a Photovolatic station from one investor to another is concerned, we should distinguish between investors holding a Production License and those granted an exemption, under Law 3851/2010. For the first category, the owner of a Production License, following a relevant decision by the Regulatory Authority for Energy, may transfer his license to other natural or legal person(s). However, solar (PV) stations with installed power capacity smaller than or equal to one (1) MWp are not allowed to be transferred before the beginning of their operation. Such transfer is only allowed towards legal entities, as long as the total share capital of the company to which they are being transferred is held by the transferring person or legal entity.
Regarding the pricing of electric energy produced by PV stations, it is calculated on the basis of a Feed-in Tariff system, based on the provisions of Law 3851/2010 and Article 27A of law 3734/2009 and the Feed-in Tariffs (FiTs) are guaranteed for a period of 20 years. However, the FiTs in Greece were recently reduced by Ministerial Decision ¥Ô.¥Á.¥Ð.¥Å. /¥Õ1/2262 dated 31.01.2012, to reflect the reduction in the cost of building a PV station today.
Given the aforementioned reduction in prices and the present¦¡extended¦¡financial crisis Greece is facing, both a group of enterprises seated in Greece, as well as the Greek Ministry for Environment, Energy and Climate Change are investigating the possibility of imposing measures providing for a FiT premium granted to photovoltaic stations built with equipment manufactured locally. Such a measure would contribute in the wider effort to boosting industry development and development, in general, of the economy in Greece.
More specifically, the representatives of five of the biggest companies operating in the photovoltaic sector in Greece (EXEL GROUP, HELIOSPERA, ALUMIL, MECHATRON,
NOE/ALUSET) presented a coherent and thorough proposal for the introduction of specific economic incentives to photovoltaic investors, who choose locally produced equipment (local content requirement bonus). This proposal was prepared in light of the legislative proposal to be submitted by the Ministry of Environment, Energy and Climate Change to the Greek Parliament and addresses an issue long discussed and considered by other Member States, as well.
The Law Firm ¡®Metaxas & Associates¡¯ was assigned by the abovementioned Greek companies to deliver a legal opinion on the matter analyzing the main legal aspects of the adoption of a relevant regulation by the Greek Ministry of Environment, Energy and Climate Change. The said legal opinion focused on the compatibility of such a measure in its different variations with European State Aid and WTO Law.
The main conclusions of this legal opinion consist of the following points:
1. Taking into account the case law of the Court of the EU and the nature and function of the Greek FiT Mechanism, it may be argued that it is questionable if a measure consisting in the provision of a targeted feed-in tariff premium granted to investors using photovoltaic equipment produced in Greece does not even constitute a ¡®state¡¯ aid, within the meaning of Art. 107 (1) of the Treaty for the Functioning of the European Union (TFEU). However, it is not unlikely that the European Commission might raise objections, given the difficulty in defining the exact legal meaning of ¡®state aid¡¯ and its parameters and the often observed divergences between the case law of the Court of the EU and the Commission¡¯s practice in interpreting and applying the prohibition rule of Article 107 par.1 TFEU in the course of the examination of FiT Schemes.
2. Furthermore, in the event that such a supporting measure is considered to constitute state aid, EU State Aid Law provides for specific categories of exemptions, the application of which may render a measure ad hoc compatible with the common market. More specifically, given the serious distortion of the Greek economy, consisting of deep recession and high unemployment rates, the invocation of the exemption of article 107 par. 3 (b) TFEU may render the support of the local photovoltaic production compatible with the common market, provided the ability of the photovoltaic sector to have a key role in boosting the Greek economy.
3. Moreover, such a measure containing economic incentives may also be considered compatible aid on the basis of Article 107 par.3 (c), as far as the promotion of the photovoltaic sector in Greece is in line with the fundamental aim of the European Union to promote sustainable environmental growth and thus promote renewable energy resources. In this context, though, any possible distortions of competition are examined in a stricter way by the European Commission. However, given the problems the Greek photovoltaic sector faces due to the present economic conditions in Greece and the limited character of the proposed measure in terms of its size and duration, the case of its compatibility with EU State Aid Law is strongly defendable.
4. However, it is of great importance to be mentioned that the only institution competent to assess the compatibility of the proposed measure is the European Commission, to which the measure has to be notified. In addition, the proposed measure cannot be put into effect before the Commission has delivered its decision approving it (so-called ¡®stand still clause¡¯).
5. In any case, the said legal opinion also examined the alternative to give economic incentives to investors using photovoltaic equipment of European origin, which raises no issues of compatibility with European state aid law, whereas possible tensions with the rules of the World Trade Organization may be easier avoided.
6. Lastly, the examples of Italy and France, where a relevant measure is already in force, may indeed provide useful guidance for the implementation of a feed-in tariff bonus with a local content requirement.
¡®Metaxas & Associates¡¯ Law Firm (www.metaxaslaw.gr) was established in an effort to create a ¡®boutique¡¯ legal practice offering high quality, expert legal services in the selected fields of its specialization. M&A operates with a well-respected Greek and international clientele and is recognized as one of the leading Greek Law Firms in the various legal fields of the Energy Sector as well as in regulation issues in network economies. The firm specializes in EU Law, Energy Law and Regulation, EU Competition and State Aid Law, TMT, Commercial, Corporate and Public Procurement Law. The Firm¡¯s legal expertise, coupled with its understanding of contemporary business strategies and practices, allows M&A to address exceptionally demanding legal issues, propose innovative ideas and deliver high quality, rapid, effective services in line with international standards and practice.
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