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.

Client:
Confidential

Date of Engagement:
March - May 2012

Countries of Operation:
Greece

Business Function:
Investment Advisory Services

Business Sector:

Renewable Energy

 

Budget:

130,000,000