The PV industry continues to look towards emerging markets like Greece to help offset the anticipated decline of major European PV markets in 2012. In fact, the PV market in Greece – despite ongoing financial uncertainty – still represents a promising opportunity, driven by strong demand ‘potential’ and attractive project returns.
Last year, PV demand in Greece approached the 400-MW-level. This was achieved because power purchase agreement (PPA) awards (largely ground mount) were readily financed and additionally, residential installations accounted for a significant uptake (21% of the total market) due to available bank-financing and strong customer demand.
Economic concerns provide a worrying backdrop
Today however, both residential and non-residential segments are being impacted by economic uncertainty. Limited financial resources in the private sector – due to a shortage of bank liquidity – are providing significant constraints. And within the non-residential segments, local banks are offering limited participation, with the financial commitment having to be provided mainly by foreign entities or PV manufacturers directly.
The Greek economy – as a whole – is exhibiting tightening money-flow, with consumers anxious regarding both austerity measures and possible bank failures. Additionally, early indications of market ‘doldrums’ are providing further concerns, ahead of the forthcoming Q2’12 general elections and the pending EU-bailout package disbursements.
Market conditions at the start of 2012
In Q1’12, the market appears to have declined – although official data is not yet available to quantify exactly by how much. This drop was caused – in part – by an extraordinary FIT rate reduction that impacted heavily on the residential segment. Moreover, this change was also compounded by harsher-than-normal weather conditions during the winter season in Greece that had an adverse effect on ground-mounted installations.
Regarding installed system prices, Q1’12 recorded further Q/Q declines, but notably these declines were (sequentially) lower than seen during the previous quarter. Critically however, these system price declines are now helping to offset the FIT rate reductions of February 2012, thereby maintaining project investment return rates potentially high enough to stimulate further demand.
Optimism for 2H’12?
The prospects for an uptake in PV demand within Greece during 2H’12 remain somewhat dependent upon various external factors. For example, the outcome of the EU bailout terms may determine how much finance flows directly into the private sector, and customer acceptance of the lower FIT rates also acts as a precondition to any resurgence within the residential segment.
Leading indicators for 2012 Greece PV market size
According to research featured in the forthcoming Solarbuzz European PV Markets Quarterly report, PPA awards administered by the Hellenic Transport System Operator (HTSO) exceeded the 2-GW-level at the start of 2012. These awards have 18 months – from award date – to realize installation and feed electricity directly into the network.
Upside to potential demand may also come from government-facilitated ‘fast-track’ projects; 500 MW of announced projects are currently in the pipeline, and – although timing on delivery cannot be predicted accurately – some of this is expected to occur during 2012.
PV companies in Greece that are least affected by the finance-constrained market are those currently engaged within higher ‘quality’ project developments that have been successful in securing the necessary finance. However, other companies are understandably delaying plans while carrying the burden of the projects until finance can be secured to enable system construction.