Bloomberg – Project Helios

As noted on our web site, ECCO International, Inc., along with the National Bank of Greece and Guggenheim Partners, have been awarded the consultancy to provide financial and technical services to the Hellenic Republic for the project “HELIOS”.

The project “HELIOS” will develop, over the course of many years, 10,000 MW of photovoltaic (PV) energy in Greece for exports to Germany and other Northern European countries. This long-term and complex PV development has far reaching effects not only for Greece but for the entire EU.

Recently, ECCO president and CEO, Dr. Alex Papalexopoulos, Ph.D. was interviewed for a news article published by Bloomberg (http://www.bloomberg.com/news/2012-04-05/greece-urged-to-sell-virtual-solar-power-to-help-eu-meet-goals.html). Contained in the article and the Q&A below are details related to the intricacies related to energy supply and energy markets and how the two function balancing both the financial and physical requirements.

Below are some intriguing questions and answers not fully covered in the article that are pertinent to today’s energy markets.

BLOOMBERG QUESTION: I understand why the “Virtual Transfer” or “Statistical Transfer” approach is beneficial; it avoids the troublesome issues connected with infrastructure requirements, especially in the short term, and it helps Northern EU member States reach their climate change and environmental targets. It also enables Greece to get raise revenues from the solar PV investments.

But, given that in Germany, supply issues will be crucial as you said from about 2014, is this virtual solution really helpful?

ECCO RESPONSE: The concept of the statistical transfer or “virtual sales” allows excess renewable energy (solar on our case) produced in one country to be virtually transferred to another country – in this case renewable energy statistics count towards the renewable target of the latter country. This practice is encoded in Article 6 of DIRECTIVE 2009/28/EC. So the EU directives support the Statistical Transfer. The objective is to allow member states with low or expensive renewable potential (receiving member states) to use renewable electricity produced in other countries with higher renewable potential and lower production costs (host or exporting member states) to comply with their national target.

BLOOMBERG QUESTION: In other words, are climate change goals enough to convince German rate payers to buy the power they’re not getting?

ECCO RESPONSE: This method of transfer is mainly designed to help countries which cannot meet their national target. Germany is ahead of any other EU country in meeting their national target. So Germany may not be an ideal candidate for this. However, there are countries like Italy which have said they cannot meet their national target by 2020. Such countries are ideal for such a mechanism. We are now evaluating the maximum amount of solar energy Greece can produce and consume as part of this method without creating market and system (physical) operational problems. It appears that this threshold is in the thousands of MWs. Again, this method is very appealing because it is very simple to implement.

BLOOMBERG QUESTION: As we discussed Germany will have energy supply problems as a result of the nuclear issue (The German government announced about a year ago plans to shut all of the nation’s nuclear power plants within the next 11 years, as a result of the Japanese disaster at Fukushima which caused an electoral backlash by voters opposed to reliance on nuclear energy. The plan calls for phasing out all of Germany’s 17 nuclear reactors — eight of which are offline — and drastically expanding the use of renewable resources. The decision was based on recommendations of an expert commission appointed after the Japanese disaster to study the nuclear industry that generates 23 percent of Germany’s electricity.) They have every interest to develop plans to cover the gap. For this specific goal the physical transfer of solar energy could help them.

Or, will the virtual solution just account for the first few hundreds of megawatts of the project HELIOS while the transmission infrastructure gets built/upgraded in order to accommodate a vast amount of physical sale transfers to Northern Europe?

ECCO RESPONSE: Yes, exactly. We want to deploy the statistical or virtual transfer first because it is the low hanging fruit. At the same time we’ll start implementing gradually the physical transfer option. Please note, with the existing infrastructure alone we can physically export about 1,600 MWs. (The interconnection via Italy has a Net Transfer Capability of about 500 MWs and the interconnections via the eastern and western Balkans have a Net Transfer Capability of about 1,100 MWs.)

BLOOMBERG QUESTION: The power that is virtually bought is still consumed locally in Greece, that’s correct?

ECCO RESPONSE: Yes.

BLOOMBERG QUESTION: Is this virtual/statistical approach used anywhere else in the world- or is this concept totally new, and developed by ECCO?

ECCO RESPONSE: This is a standard method applied in many countries. As I mentioned earlier is contained in Article 6 of DIRECTIVE 2009/28/EC.

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