Home > Project Experience > Investment Advisory

Due diligence study: EUR 130 mln photovoltaic power production investment in Greece

Under contract to an international investment firm, Navigator implemented a comprehensive investment study and due diligence on a EUR 130 million, 60 MW photovoltaic investment in Greece.

 

Under contract to an international investment firm, Navigator implemented a comprehensive investment study and due diligence on a EUR 130 million, 60 MW photovoltaic investment in Greece.

Achieving 20% of total electricity production by renewable energy sources is a European Union goal and is reflected in Greek national law. In 2010, Law 3851/2010 was passed which established a high, sliding scale of feed-in tariffs (FIT*) for photovoltaic investments, applicable for a 20-year period.

The Greek government has established a target of 2,200 MW photovoltaic capacity in operation by 2020. By the end of 2011 there were already 626 MW in operation, an increase of 1197% over the 48 MW in operation in 2009.**

Our client asked us to review the risks and benefits of investing in the photovoltaic power generation sector in Greece. Our responsibilities and project tasks under this due diligence project included:

  • A detailed assessment of Greek laws and contracts for PV and other renewable energy investments, together with a detailed overview of Greece’s national payment structures and risks thereof;
  • An assessment of the Greek fiscal adjustment programme and the likely impact on unilateral FIT changes, payment delays or other risks, including privatisation risks and Greek Eurozone exit risks;
  • A detailed financial analysis of the photovoltaic investment;
  • A review of the specific licensing procedures required in Greece, including production planning agreements, environmental approvals, land use approvals, and other certifications;
  • An assessment of insurance and funding potential and alternative funding sources for the renewable energy sector (RES);
  • A review of the Engineering, Procurement and Contracting (EPC) agreement and other technical documents and feasibility studies;
  • A comprehensive risk analysis, which translated into sensitivities and scenarios for financial modelling;
  • An opportunity cost analysis for investing in other renewable or conventional energy sectors in Greece and other countries.

The investment decision remains pending the political situation and other issues in Greece. With the second parliamentary elections taking place on June 17th in Greece, and with manifest problems in financing renewable and conventional power generation by the national grid operator, the question remains whether the country will be able to continue its commitment to a high FIT for photovoltaic power (including for licenses issued before January 31st, 2012) or whether a unilateral change in the FIT will occur.

This is the largest PV investment Navigator has studied to date. We have implemented a range of due diligence and investment planning studies for photovoltaic power generation as well as other renewable energy systems, including wind, biomass, and hydro.

 

*Table 1: Greek Feed-in Tariffs under Old and New FIT Rate Decision (EUR/MWh)*

License Month

Licensed prior to 31 January 2012

Licensed after 31 January 2012

Difference

February 2009

400.00

 

 

August 2009

400.00

 

 

February 2010

400.00

 

 

August 2010

392.04

 

February 2011

372.83

 

August 2011

351.01

 

February 2012

333.81

292.08

-13%

August 2012

314.27

271.64

-14%

February 2013

298.87

252.62

-15%

August 2013

281.38

234.94

-17%

February 2014

268.94

218.49

-19%

August 2014

260.97

203.2

-22%

* For installations greater than 100 KW connected to the mainland distribution system

 

**Law 3851/2010 sparked an investment boom in RES installations in Greece, and more specifically in PV plants. In 2009, Greece has just 48.2 MW of installed PV generation capacity. By 2011, this had increased to 625.6 MW, an increase of 1197%. In contrast, wind energy generation capacity totalled 1,636 MW in 2011, an increase of 40% over 2009.

 

Table 2: Installed RES Capacity, 2009-2011

Installed Capacity (MW)

2009

2010

2011

Change 11/09

Wind

1,171.1

1,297.8

1,635.9

40%

Biomass

40.8

41.1

44.5

9%

Small Hydroelectric

182.9

197.1

205.6

12%

Photovoltaic

48.2

202.2

625.6

1197%

Total

1,443.0

1,738.2

2,511.6

74%

Change

 

20%

44%

 

Energy Generated GWh

2009

2010

2011

Change 11/09

Wind

2,547.0

2,714.0

3,315.0

30%

Biomass

182.0

194.0

199.0

9%

Small Hydroelectric

658.0

754.0

581.0

-12%

Photovoltaic

47.0

169.0

649.0

1281%

Total

3,434.0

3,831.0

4,744.0

38%

Change

 

12%

24%

 

Ministry of Environment, Energy and Climate Change