Greece: Uncertainty rules after Syriza victory

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Richard Heap
January 30, 2015
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This content is from our archive. Some formatting or links may be broken.
Greece: Uncertainty rules after Syriza victory

Would you do business with someone who happily walks away from their debts? The answer for most of us would be: of course not.

This is why wind investors must think very carefully about future activity in Greece. It may offer attractive development potential but, quite simply, that is no longer sufficient.

This week, Greece elected far-left party Syriza to lead an anti-austerity coalition government. New prime minister Alexis Tsipras promised that Greece would walk away from austerity measuresimposed by the European Union and International Monetary Fund in 2010 as part of its €240bn bailout.

Tsipras has swept to power pledging to renegotiate the repayment terms of this bailout, saying the country would leave behind “fear and authoritarianism” and “five years of humiliation and anguish”.

He has also raised the prospect of Greece leaving the euro, even though around 70% of Greeks want to keep it. Even so, Tsipras has publicly committed to negotiation rather than confrontation.

So what does this mean for domestic wind?

In our view, Greece is unlikely to leave the euro and should remain part of the European Union. This means it would continue to be bound by EU renewable energy policies, such as the obligation to gain 20% of energy from renewables by 2020. It currently stands at around 6%, and previous governments have shown willingness to drive major growth in the solar and wind industries.

For example, Greece has a target of reaching wind capacity of 7.5GW by 2020, which would be an increase of around fourfold from its current capacity of 1.9GW. Reaching this looks nigh on impossible, especially since it has added an average of less than 100MW in each of the last three years. But the intention is there.

That 1.9GW current capacity also makes Greece the 15th largest wind market in Europe. Sure, it’s by no means a wind giant but, by the same measure, it’s hardly an unproven market either.

In other words, wind development in Greece can and does work. The supply chain is established and growing, and the development teams have brought strong sites online. That is not in question.

Nevertheless, as the Greek financial infrastructure continues to be further undermined and eroded, investors will hesitate.

And with good reason. It was only last March when the Greek government voted for draft laws to retrospectively reform feed-in tariffs; and also asked all renewable energy producers to contribute a share of their 2013 income — in wind’s case, 10% — to help plug a €700m hold in the country’s renewable energy fund.

The country has shown it is happy to change the rules when it suits it, which gives investors very little certainty.

Of course, manufacturers should still profit from any developments that come forward. But we would be very wary about any overseas investor going over to Greece and taking development risk.

That isn't because high development risk isn’t palatable, but rather
because in order for it to be a viable and realistic opportunity, there have to be clearly defined parameters in which to work.

The last Greek government was happy to change the rules for renewables investors retrospectively; and the new government has come to power on a platform that promotes the possibility of walking away from its obligations. That tells us all we need to know.

Would you do business with someone who happily walks away from their debts? The answer for most of us would be: of course not.

This is why wind investors must think very carefully about future activity in Greece. It may offer attractive development potential but, quite simply, that is no longer sufficient.

This week, Greece elected far-left party Syriza to lead an anti-austerity coalition government. New prime minister Alexis Tsipras promised that Greece would walk away from austerity measuresimposed by the European Union and International Monetary Fund in 2010 as part of its €240bn bailout.

Tsipras has swept to power pledging to renegotiate the repayment terms of this bailout, saying the country would leave behind “fear and authoritarianism” and “five years of humiliation and anguish”.

He has also raised the prospect of Greece leaving the euro, even though around 70% of Greeks want to keep it. Even so, Tsipras has publicly committed to negotiation rather than confrontation.

So what does this mean for domestic wind?

In our view, Greece is unlikely to leave the euro and should remain part of the European Union. This means it would continue to be bound by EU renewable energy policies, such as the obligation to gain 20% of energy from renewables by 2020. It currently stands at around 6%, and previous governments have shown willingness to drive major growth in the solar and wind industries.

For example, Greece has a target of reaching wind capacity of 7.5GW by 2020, which would be an increase of around fourfold from its current capacity of 1.9GW. Reaching this looks nigh on impossible, especially since it has added an average of less than 100MW in each of the last three years. But the intention is there.

That 1.9GW current capacity also makes Greece the 15th largest wind market in Europe. Sure, it’s by no means a wind giant but, by the same measure, it’s hardly an unproven market either.

In other words, wind development in Greece can and does work. The supply chain is established and growing, and the development teams have brought strong sites online. That is not in question.

Nevertheless, as the Greek financial infrastructure continues to be further undermined and eroded, investors will hesitate.

And with good reason. It was only last March when the Greek government voted for draft laws to retrospectively reform feed-in tariffs; and also asked all renewable energy producers to contribute a share of their 2013 income — in wind’s case, 10% — to help plug a €700m hold in the country’s renewable energy fund.

The country has shown it is happy to change the rules when it suits it, which gives investors very little certainty.

Of course, manufacturers should still profit from any developments that come forward. But we would be very wary about any overseas investor going over to Greece and taking development risk.

That isn't because high development risk isn’t palatable, but rather
because in order for it to be a viable and realistic opportunity, there have to be clearly defined parameters in which to work.

The last Greek government was happy to change the rules for renewables investors retrospectively; and the new government has come to power on a platform that promotes the possibility of walking away from its obligations. That tells us all we need to know.

Would you do business with someone who happily walks away from their debts? The answer for most of us would be: of course not.

This is why wind investors must think very carefully about future activity in Greece. It may offer attractive development potential but, quite simply, that is no longer sufficient.

This week, Greece elected far-left party Syriza to lead an anti-austerity coalition government. New prime minister Alexis Tsipras promised that Greece would walk away from austerity measuresimposed by the European Union and International Monetary Fund in 2010 as part of its €240bn bailout.

Tsipras has swept to power pledging to renegotiate the repayment terms of this bailout, saying the country would leave behind “fear and authoritarianism” and “five years of humiliation and anguish”.

He has also raised the prospect of Greece leaving the euro, even though around 70% of Greeks want to keep it. Even so, Tsipras has publicly committed to negotiation rather than confrontation.

So what does this mean for domestic wind?

In our view, Greece is unlikely to leave the euro and should remain part of the European Union. This means it would continue to be bound by EU renewable energy policies, such as the obligation to gain 20% of energy from renewables by 2020. It currently stands at around 6%, and previous governments have shown willingness to drive major growth in the solar and wind industries.

For example, Greece has a target of reaching wind capacity of 7.5GW by 2020, which would be an increase of around fourfold from its current capacity of 1.9GW. Reaching this looks nigh on impossible, especially since it has added an average of less than 100MW in each of the last three years. But the intention is there.

That 1.9GW current capacity also makes Greece the 15th largest wind market in Europe. Sure, it’s by no means a wind giant but, by the same measure, it’s hardly an unproven market either.

In other words, wind development in Greece can and does work. The supply chain is established and growing, and the development teams have brought strong sites online. That is not in question.

Nevertheless, as the Greek financial infrastructure continues to be further undermined and eroded, investors will hesitate.

And with good reason. It was only last March when the Greek government voted for draft laws to retrospectively reform feed-in tariffs; and also asked all renewable energy producers to contribute a share of their 2013 income — in wind’s case, 10% — to help plug a €700m hold in the country’s renewable energy fund.

The country has shown it is happy to change the rules when it suits it, which gives investors very little certainty.

Of course, manufacturers should still profit from any developments that come forward. But we would be very wary about any overseas investor going over to Greece and taking development risk.

That isn't because high development risk isn’t palatable, but rather
because in order for it to be a viable and realistic opportunity, there have to be clearly defined parameters in which to work.

The last Greek government was happy to change the rules for renewables investors retrospectively; and the new government has come to power on a platform that promotes the possibility of walking away from its obligations. That tells us all we need to know.

Would you do business with someone who happily walks away from their debts? The answer for most of us would be: of course not.

This is why wind investors must think very carefully about future activity in Greece. It may offer attractive development potential but, quite simply, that is no longer sufficient.

This week, Greece elected far-left party Syriza to lead an anti-austerity coalition government. New prime minister Alexis Tsipras promised that Greece would walk away from austerity measuresimposed by the European Union and International Monetary Fund in 2010 as part of its €240bn bailout.

Tsipras has swept to power pledging to renegotiate the repayment terms of this bailout, saying the country would leave behind “fear and authoritarianism” and “five years of humiliation and anguish”.

He has also raised the prospect of Greece leaving the euro, even though around 70% of Greeks want to keep it. Even so, Tsipras has publicly committed to negotiation rather than confrontation.

So what does this mean for domestic wind?

In our view, Greece is unlikely to leave the euro and should remain part of the European Union. This means it would continue to be bound by EU renewable energy policies, such as the obligation to gain 20% of energy from renewables by 2020. It currently stands at around 6%, and previous governments have shown willingness to drive major growth in the solar and wind industries.

For example, Greece has a target of reaching wind capacity of 7.5GW by 2020, which would be an increase of around fourfold from its current capacity of 1.9GW. Reaching this looks nigh on impossible, especially since it has added an average of less than 100MW in each of the last three years. But the intention is there.

That 1.9GW current capacity also makes Greece the 15th largest wind market in Europe. Sure, it’s by no means a wind giant but, by the same measure, it’s hardly an unproven market either.

In other words, wind development in Greece can and does work. The supply chain is established and growing, and the development teams have brought strong sites online. That is not in question.

Nevertheless, as the Greek financial infrastructure continues to be further undermined and eroded, investors will hesitate.

And with good reason. It was only last March when the Greek government voted for draft laws to retrospectively reform feed-in tariffs; and also asked all renewable energy producers to contribute a share of their 2013 income — in wind’s case, 10% — to help plug a €700m hold in the country’s renewable energy fund.

The country has shown it is happy to change the rules when it suits it, which gives investors very little certainty.

Of course, manufacturers should still profit from any developments that come forward. But we would be very wary about any overseas investor going over to Greece and taking development risk.

That isn't because high development risk isn’t palatable, but rather
because in order for it to be a viable and realistic opportunity, there have to be clearly defined parameters in which to work.

The last Greek government was happy to change the rules for renewables investors retrospectively; and the new government has come to power on a platform that promotes the possibility of walking away from its obligations. That tells us all we need to know.

Would you do business with someone who happily walks away from their debts? The answer for most of us would be: of course not.

This is why wind investors must think very carefully about future activity in Greece. It may offer attractive development potential but, quite simply, that is no longer sufficient.

This week, Greece elected far-left party Syriza to lead an anti-austerity coalition government. New prime minister Alexis Tsipras promised that Greece would walk away from austerity measuresimposed by the European Union and International Monetary Fund in 2010 as part of its €240bn bailout.

Tsipras has swept to power pledging to renegotiate the repayment terms of this bailout, saying the country would leave behind “fear and authoritarianism” and “five years of humiliation and anguish”.

He has also raised the prospect of Greece leaving the euro, even though around 70% of Greeks want to keep it. Even so, Tsipras has publicly committed to negotiation rather than confrontation.

So what does this mean for domestic wind?

In our view, Greece is unlikely to leave the euro and should remain part of the European Union. This means it would continue to be bound by EU renewable energy policies, such as the obligation to gain 20% of energy from renewables by 2020. It currently stands at around 6%, and previous governments have shown willingness to drive major growth in the solar and wind industries.

For example, Greece has a target of reaching wind capacity of 7.5GW by 2020, which would be an increase of around fourfold from its current capacity of 1.9GW. Reaching this looks nigh on impossible, especially since it has added an average of less than 100MW in each of the last three years. But the intention is there.

That 1.9GW current capacity also makes Greece the 15th largest wind market in Europe. Sure, it’s by no means a wind giant but, by the same measure, it’s hardly an unproven market either.

In other words, wind development in Greece can and does work. The supply chain is established and growing, and the development teams have brought strong sites online. That is not in question.

Nevertheless, as the Greek financial infrastructure continues to be further undermined and eroded, investors will hesitate.

And with good reason. It was only last March when the Greek government voted for draft laws to retrospectively reform feed-in tariffs; and also asked all renewable energy producers to contribute a share of their 2013 income — in wind’s case, 10% — to help plug a €700m hold in the country’s renewable energy fund.

The country has shown it is happy to change the rules when it suits it, which gives investors very little certainty.

Of course, manufacturers should still profit from any developments that come forward. But we would be very wary about any overseas investor going over to Greece and taking development risk.

That isn't because high development risk isn’t palatable, but rather
because in order for it to be a viable and realistic opportunity, there have to be clearly defined parameters in which to work.

The last Greek government was happy to change the rules for renewables investors retrospectively; and the new government has come to power on a platform that promotes the possibility of walking away from its obligations. That tells us all we need to know.

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Full archive access is available to members only

Not a member yet?

Become a member of the 6,500-strong A Word About Wind community today, and gain access to our premium content, exclusive lead generation and investment opportunities.