Better be cautious in Greece
The wind market in Greece has finally showed signs of life, but investors need to be cautions.
Last week, the European Bank for Reconstruction & Development committed to provide up to €300m to finance renewable energy projects in Greece. The aim is to help the financially-distressed country reach its target of adding 2.4GW of new green energy capacity by 2020.
The organisation said that one the first project it is considering financing is a 43MW wind farm to be developed by Greek firm Volterra. EBRD’s funds are also supposed to help the country introduce competitive auctions to replace fixed-price feed-in tariffs.
This injection of fresh funding for the Greek wind sector should be good news for investors. It means that developers can capitalise on Greece’s strong wind resources, and further grow a market with 2.4GW of installed capacity. Of this, 239MW was installed in 2016, which is a 53% increase from the 156MW of installed capacity in 2015.
Despite that, investors still need to be very cautious.
Since its 2015 bailout, Greece’s budget and economic growth have beaten projections. However, its recovery has been based solely on external aid, rather than any inherent strength in its own economy. International organisations like the International Monetary Fund argue that Greece’s recent performance is unsustainable.
And this is already being proven, since latest data on GDP have been disappointing, showing an annual contraction for the year ending in December 2016 of -1.1%.
This means that Greece needs new financial aid to keep growing, which adds extra pressure to the country’s austerity targets. This new debt will need to be re-paid.
The wind market in Greece still has potential, but the country has too many unresolved issues to be considered an attractive market for investors.