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Cablegate: Renewables Market in Greece - Opic-Supported

VZCZCXRO1752
OO RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHTH #1504 3051551
ZNR UUUUU ZZH
O 311551Z OCT 08 ZDS
FM AMEMBASSY ATHENS
TO RUEHC/SECSTATE WASHDC IMMEDIATE 2704
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE PRIORITY
RHMFIUU/DEPT OF ENERGY WASHINGTON DC PRIORITY
RHMFIUU/HQ EPA WASHINGTON DC PRIORITY

UNCLAS ATHENS 001504

C O R R E C T E D C O P Y - CAPTION ADDED

SENSITIVE
SIPDIS

DEPT FOR EUR/ERA FOR BEH/NELSON, EUR/PGI FOR TESSLER,
OES/PCI FOR FITE/HUDAK, OES/EGC FOR FENDLEY, OPIC FOR
PEARCE/HANSLEY

E.O. 12958: N/A
TAGS: EINV ENRG KGHG SENV TRGY GR IS
SUBJECT: RENEWABLES MARKET IN GREECE - OPIC-SUPPORTED
INVESTMENT FUNDS

REF: A. SECSTATE 103210
B. ATHENS 001411
C. ATHENS 001457
D. ATHENS 001481

1. (SBU) Post believes that at this time Greece is not yet
ready for investment in the renewables sector given
bureaucratic hurdles and a substantial backlog of projects.
(See reftel d for details on the renewables sector in
Greece.) Despite strong growth potential and a high priority
given to stimulating market conditions, Post believes that
the Government of Greece (GoG) still faces considerable
challenges to building capacity and facilitating investment
in the sector. At present, although Greece is a member of
the European Union, it continues to be ranked low in the
areas of investment climate and ease of doing business in
renewables.

2. (SBU) Greece's energy markets continue to be dominated by
a few players, particularly in the wind renewables sector.
Although Greece is attempting to deregulate its energy
markets, these efforts have not yet yielded results. In the
area of solar energy, the GoG is trying to revamp its
legislative structure to attract investment. The GoG offers
either a capital or a feed-in subsidy to prospective
investors; however, the financial incentives must be
restructured so that the GoG can afford this ongoing
financial obligation in the long-term. (reftel d)

3. (SBU) At the present time, the GoG has over-extended its
financial obligations and is attempting to scale down the
price to which it has committed a fixed forward rate for the
purchase of electricity. In addition, the GoG does not have
the capacity to review and administer increasing levels of
investment in renewables. There exists a substantial backlog
of applications and the request for proposals was
oversubscribed by five times in the last year. As a result,
Post does not believe that such an investment fund would be
able to realize gains over the short-term; however, if Greece
is able to straighten out its legislative framework in order
to ease bureaucratic hurdles, it could face success in the
long-term.
SPECKHARD

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