School of Social Sciences

Master’s Degree Programme in Business Administration (MBA)

Postgraduate Dissertation

Investment analysis of projects: The case of photovoltaic power plants

Aggelos Niarchos

Supervisor: Dr. Dimitrios Koufopoulos

Patras, , July 2020

Theses / Dissertations remain the intellectual property of students (“authors/creators”), but in the context of open access policy they grant to the HOU a non-exclusive license to use the right of reproduction, customisation, public lending, presentation to an audience and digital dissemination thereof internationally, in electronic form and by any means for teaching and research purposes, for no fee and throughout the duration of intellectual property rights. Free access to the full text for studying and reading does not in any way mean that the author/creator shall allocate his/her intellectual property rights, nor shall he/she allow the reproduction, republication, copy, storage, sale, commercial use, transmission, distribution, publication, execution, downloading, uploading, translating, modifying in any way, of any part or summary of the dissertation, without the explicit prior written consent of the author/creator. Creators retain all their moral and property rights.

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School of Social Sciences Master’s Degree Programme in Business Administration (MBA)

Investment analysis of renewable energy projects: The case of photovoltaic power plants

Aggelos Niarchos

Supervising Committee

Supervisor: Co-Supervisor: Dr. Dimitrios Koufopoulos Dr. Ioannis Lagoudis

Patras, Greece, July 2020 iii

I would like to express my gratitude to my supervisor Dr. Dimitrios Koufopoulos for his expert knowledge and guidance throughout the course of present dissertation. Finally, my sincere thanks go to my parents and Anna for their continual support.

iv Abstract The dissertation deals with investment analysis of Renewable Energy Sources (RES) projects with case study the photovoltaic power plants. The economic viability of investments in photovoltaic power plants under the current legislative framework and market conditions is being analyzed. The 2030 climate and energy framework which adopted by the European Council includes EU targets and policy objectives for the period from 2021 to 2030. The Key targets for 2030 state that at least 40% cuts in greenhouse gas emissions (from 1990 levels), at least 32% share for renewable energy and at least 32.5% improvement in energy efficiency. In order to meet the target of the share for renewable energy in the domestic market investments should be accelerated. The main research deals with the viability of Photovoltaic power plants project in Greece in current investment environment. Investment analysis can help define how an investment in photovoltaic plants is likely to perform and how suitable it is for a potential investor. More specifically it is the process of evaluating an investment for profitability and risk assessment. The key factors in investment analysis include the entry price, the duration of the investment and the role that the investment will play in the portfolio. A benchmark model has been developed with the determination of the basic project’s parameters. The overall efficiency of this model has been tested and the critical values for financial viability gives a certain answer to main hypothesis. Furthermore, sensitivity analysis performed by changing scenarios and basic input parameters accordingly. Keywords Renewable Energy Sources, Photovoltaic Power Plants, Greek Photovoltaic Market, Investment Analysis

v Ανάλυση επενδύσεων έργων ανανεώσιμων πηγών ενέργειας: Η περίπτωση των φωτοβολταϊκών σταθμών ηλεκτροπαραγωγής

Περίληψη Η διατριβή ασχολείται με την ανάλυση επενδύσεων έργων ανανεώσιμων πηγών ενέργειας, με μελέτη περίπτωσης των φωτοβολταϊκών σταθμών παραγωγής ενέργειας. Αναλύεται η οικονομική βιωσιμότητα επενδύσεων σε φωτοβολταϊκούς σταθμούς παραγωγής ενέργειας, σύμφωνα με το ισχύον θεσμικό πλαίσιο και τις τρέχουσες συνθήκες της αγοράς. Το πλαίσιο για το κλίμα και την ενέργεια του 2030, που ενέκρινε το Ευρωπαϊκό Συμβούλιο, περιλαμβάνει στόχους της Ε.Ε. και πολιτικούς στόχους για την περίοδο από το 2021 έως το 2030. Οι βασικοί στόχοι για το 2030 δηλώνουν, τουλάχιστον, 40% μειώσεις των εκπομπών αερίων του θερμοκηπίου (από τα επίπεδα του 1990), τουλάχιστον 32% μερίδιο για ανανεώσιμες πηγές ενέργειας και τουλάχιστον, 32,5% βελτίωση στην ενεργειακή απόδοση. Προκειμένου να επιτευχθεί ο στόχος του μεριδίου για ανανεώσιμες πηγές ενέργειας στην εγχώρια αγορά, οι επενδύσεις πρέπει να επιταχυνθούν. Η κύρια έρευνα αφορά τη βιωσιμότητα ενός επενδυτικού έργου φωτοβολταϊκών σταθμών στο τρέχον επενδυτικό περιβάλλον στην Ελλάδα. Η ανάλυση επένδυσης μπορεί να συμβάλει στον καθορισμό της πιθανότητας υλοποίησης μιας επένδυσης σε φωτοβολταϊκά και στην καταλληλόλητά της είναι για έναν δυνητικό επενδυτή. Πιο συγκεκριμένα, είναι η διαδικασία αξιολόγησης μιας επένδυσης για κερδοφορία και εκτίμηση κινδύνου. Οι βασικοί παράγοντες στην ανάλυση των επενδύσεων περιλαμβάνουν την τιμή εισόδου, τη διάρκεια της επένδυσης και τον ρόλο που θα παίξει η επένδυση στο χαρτοφυλάκιο. Έχει αναπτυχθεί ένα μοντέλο αναφοράς όπου καθορίζονται οι βασικές παράμετροι του έργου. Η οικονομική αποδοτικότητα του συγκεκριμένου μοντέλου έχει ελεγχθεί και οι κρίσιμες τιμές, για τις οποίες το έργο είναι οικονομικά βιώσιμο, δίνουν μια σαφή απάντηση στην κύρια υπόθεση. Επιπλέον, πραγματοποιήθηκε ανάλυση ευαισθησίας με την αλλαγή σεναρίων και των αντίστοιχων βασικών παραμέτρων εισόδου . Λέξεις – Κλειδιά Ανανεώσιμες Πηγές Ενέργειας, φωτοβολταϊκοί σταθμοί, ελληνική αγορά φωτοβολταϊκών, ανάλυση επενδύσεων

vi Table of Contents Abstract ...... v Περίληψη...... vi Table of Contents ...... vii List of Figures ...... ix List of Tables ...... x List of Abbreviations & Acronyms ...... xi CHAPTER 1: INTRODUCTION ...... 1 1.1 Introduction ...... 1 1.2 The research objective ...... 2 1.3 Research approach ...... 2 1.4 Rationale for the study and the contribution to the field ...... 3 1.5 Dissertation outline ...... 4 CHAPTER 2: LITERATURE REVIEW ...... 5 2.1 Renewable Energy ...... 5 2.1.1 History ...... 5 2.1.2 Global Overview ...... 6 2.1.3 Market and Industry Trends ...... 7 2.1.4 Benefits of Renewable Energies Production ...... 9 2.1.5 Barriers to Renewable Energy technology deployment ...... 11 2.1.6 Future Projections ...... 12 2.2 Why ? Why ? ...... 12 2.3 Photovoltaics’ Technology ...... 14 2.3.1 Efficiency over time ...... 16 2.3.2 PV Learning Curve ...... 17 2.4 Greek PV Market ...... 18 2.4.1 Legislative Framework ...... 20 2.4.2 License Procedure ...... 22 2.4.3 SWOT Analysis ...... 25 2.5 Financial Billing Mechanisms ...... 27 2.5.1 Net- Metering and Virtual Net -Metering ...... 28 2.5.2 Self-gereration by selling up to 20% of the energy produced ...... 30 2.5.3 Sale of all generated energy to the grid ...... 30 CHAPTER 3: RESEARCH METHODOLOGY ...... 33 3.1 Introduction ...... 33 3.2 Research Design ...... 33 3.3 Case Study Research ...... 33 3.4 Instrument ...... 35 3.4.1 Data Collection Process ...... 35 3.4.2 Measurements ...... 39 3.5 Analysis of findings ...... 48 3.6 Validity and Reliability ...... 48 CHAPTER 4: FINDINGS ...... 49 4.1 Introduction ...... 49 4.2 Basic Assumptions ...... 49 4.3 Efficiency of the Benchmark Model ...... 51 4.4 Sensitivity Analysis and Alternatives ...... 53 4.5 Decision Making ...... 59

vii CHAPTER 5: SUMMARY CONCLUSIONS AND RECOMMENDATIONS ...... 62 5.1 Summary of the dissertation ...... 62 5.2 Research contributions ...... 63 5.3 Future research and development ...... 64 REFERENCES: ...... 65 APPENDIX A: Forecasted PV System Electricity Production ...... 69 APPENDIX B: Free Cash Flows Statement and Results ...... 70

viii List of Figures

Figure 2. 1 Renewable Energy Sources ...... 5 Figure 2. 2 Estimated Renewable Energy Share of Global Electricity Production ...... 6 Figure 2. 3 Renewable Power Capacity 2019 ...... 7 Figure 2. 4 Benefits of Renewable Energy Production ...... 10 Figure 2. 5 Barriers to deployment of Renewable Energy ...... 11 Figure 2. 6 Electricity Potential of Photovoltaics in European Countries ...... 13 Figure 2. 7 Solar electricity generated per KWp ...... 14 Figure 2. 8 Solar Cells ...... 15 Figure 2. 9 The learning curve of photovoltaics ...... 17 Figure 2. 10 Renewable Energy Share of Greece’s Electricity Production in 2018 ...... 18 Figure 2. 11 Installed Capacity of Renewable Energy Sources (MW) Greece ...... 18 Figure 2. 12 Greek PV Market – Installation Power (MWp) ...... 19 Figure 2. 13 How Net Metering Works ...... 21 Figure 2. 14 SWOT matrix of developing PV Power Plants in Greece ...... 26 Figure 2. 15 Ground mounted and Roof-top PV Systems ...... 29 Figure 3. 1 PVGIS: the initial parameters for the fix - angle benchmark model…...…….37 Figure 3. 2 ...... 38 Figure 3. 3 Production Flow Chart ...... 38 Figure 3. 4 The % CPI of Greece from 2010-2019 ...... 46 Figure 4. 1 Forecast PV System Energy Output (KWh) ...... 50 Figure 4. 2 Sensitivity Analysis BM and 1st Alternative Model: use of 2-axis trackers .. 54 Figure 4. 3 Cumulative Cash Flows for the BM –1st Alternative: use (no) of trackers .... 54 Figure 4. 4 Sensitivity Analysis for the BM - 2nd Alternative: initial investment cost ..... 56 Figure 4. 5 Cumulative Cash Flows for the BM -2nd Alternative: initial investment cost 56 Figure 4. 6 Sensitivity Analysis for the BM -3rd Alternative: Financial Scheme...... 57 Figure 4. 7 Cumulative Cash Flows for the BM - 3rd Alternative: Financial Scheme...... 57 Figure 4. 8 Relative importance of Renewable Energy Technology risk types ...... 60

ix List of Tables

Table 2. 1 Targets for PV installations ...... 20 Table 2. 2 Main amendments of legislation regarding PV installations ...... 29 Table 2. 3 Reference Price per PV investor category ...... 31 Table 3. 1 Benchmark Model Input Data………………………………………………………..……………..36 Table 3. 2 Monthly level of generated electricity by the PV power plant (KWh) ...... 39 Table 3. 3 Budget Cost for the purchase and installation of the PV system...... 42 Table 4. 1 BM:Assumptions……………………...... ……………………………..………..49 Table 4. 2 BM: LoanTerms ...... 50 Table 4. 3 Reference Price of PV projects <500KWp ...... 51 Table 4. 4 Benchmark Model Results ...... 51 Table 4. 5 Electricity Prices for Commercial/ Industrial Medium Voltage Consumers .... 58 Table 4. 6 Electricity Prices for Farmers Medium Voltage Consumers ...... 58 Table 4. 7 Worst and Best Case Scenarios ...... 59

x List of Abbreviations & Acronyms

ADMIE: Independent Power Transmission Operator AC: Alternating Current BM: Benchmark Model CPI: Consumer Price Index CSP : Consentrating CHP: Combined Heat and Power c-Si: CIGS: Copper Iridium Gallium Selenide CF: Cash Flow DAPEEP: Operator of RES & Guarantees of Origin DSF: Discounted Cash Flows DC: Direct Current EIA: Energy Information Association FITs: Feed in Tariffs FIPs: Feed in Premiums HTSO: Hellenic Transmission System Operator SA HEDNO: Hellenic Electricity Distribution Netwrok SA ITRPV: International Technology Roadmap for Photovoltaic IRENA: International Renewable Energy Agency IRR: Internal Rate of Return LR: Learning Rate NPV: Net Present Value PPAs: Corporate Purchase Aggreements PI : Profitability Index PV: Photovoltaic PVGIS: Photovoltaic Geographical Information System PERC: Passivated Emitter and Rear Contact RAE: Regulatory Authority for Energy RES: Renewable Energy Sources STC: Standard Test Conditions SWOT: Strenghts, Weaknesses, Opportunities, Threats WACC: Weighted Average Cost of Capital

xi CHAPTER 1: INTRODUCTION

The dissertation deals with investment analysis of renewable energy projects in Greece with case study the photovoltaic power plants. The economic viability of investments in photovoltaic power plants in Greece under the current legislative framework and the market conditions will be analyzed.

1.1 Introduction

Over the previous decades, countries all over the world have been using fossil fuels including oil, coal and natural gas to cover their energy needs. However, the two main drawbacks of their usage are the prouction of large amounts of greenhouse gases and their scarcity. In order to overcome those issues towards to environmental sustainability for the next generations, countries are heading towards to Energy Transition. Energy Sector transition from fossil – based to zero-carbon by the second half of this century (2050) aiming to reduce CO2 emmissions and limit climate change. This transition is about to allow Renewables to become our main source of energy. The Development of solar power in Greece started in 2006 and installations of photovoltaics systems developed rapidly from 2011-2013 because of the appealing Feed in Tariffs (FITs) financial mechanism scheme introduced by the government and the corresponding regulations for domestic applications of rooftop solar PV. The practice of funding the Feed – in – Tariffs (FITs) resulted to an unacceptable deficit of in the Greek RES special Account. After that all the Licences procedures for new installatons were freezed. New regulations were introduced in August 2012 in order to reduce that deficit including retrospective feed-in tariffs reduction with further reductions over time. These measures enabled the deficit to be erased by 2017. A new support scheme for Renewable Energy Projects has been adopted based on Feed – on – Premiums (FIPs) since 2016. Auctions have replaced FITs after stagnating since he 2013. In 2019 the Greek PV market showed the first signs of recovery since the cumulative PV power capacity showed increase of around 6% compared to the previous year.

1 1.2 The research objective

The main issue of the project is to estimate the probability of financial viability and the profitability of an investment in Photovoltaics power plants under the current legislative framework and market conditions in Greece. The main research question concerns the viability of an investment project of Photovoltaic Power Plants in Greece under the worldwide trend for Energy Transition from fossil fuel- based to zero- carbon. In the following chapters further research questions are examined in order to answer to the main question i.e. the viaility of PV projects in Greece. The main research sub-questions could be summarized below: - What is the Renewable Energy Share of Global and National Electricity Production? - What are the main RES technologies? - Which are is the RES Market and Industry Trends? - What is the benefits and the barriers to Renewable Energy technology deployment? - How much efficient is the solar energy in Greece? - What is the PV technology nowadays? - What is the Learning Curve of PVs? - Which are the facts of PV Market in Greece? - What is the relative legislative framework and licence procedure? - Which are the available options for PVs potential investors? - Which is the potential budget cost of an investment project in PV panels in Greece? - How efficient is the Benchmark Model compared with alternatives solutions? - Which are the available options for potential investors ? - What is the main decision making process and the associated investment risks? The main research question and sub-questions help the construction of a benchmark model and the determination of the project’s basic parameters. The financial efficiency of the particular model has to be tested and the critical values for which the project is financially viable will give a clear answer to the main hypothesis.

1.3 Research approach

The Global Market and industry trends of Renewable Energy Technologies are researched including the benefits and barriers to their deployment.

2 Research regarding to the existing Photovoltaic’s Technologies, the solar panel efficiency over time and the PV learning curve is being performed. SWOT analysis of the Greek PV market, the current legislative framework for PV investments and market trends are identified. A Benchmark Model developed and the project’s basic parameters determined. The financial efficiency of the particular model is being tested and the critical values for which the project is financially viable give a clear answer to the main hypothesis. Furthermore sensitivity analysis is being performed with the change of the basic input parameters and the scenario analysis. The Benchmark Model includes the development of Photovoltaic Power Plant, with installed capacity 498,75KWp (<500KWp)in Western Greece Region at Regional Unit Of Ilia. The assumed duration of the investment is 20 years and the financial billing mechanism that would be used is the "sale all the energy generated to the grid". For PV systems with power up to 500 KWp the license procedure is more simplified than higher power projects. In addition to that the cost reduction of PV systems during the last years would make this option suitable for medium -sized potential investors as the most proposed power capacity under the current investment environment for medium- sized investors. Cost – Benefit analysis is being performed for the Benchmark Model based on market search. The methodology for the investment analysis is based on time value of money concepts and techniques. Net Present Value, Internal Rate of Return, Payback Period calculations and Ratio Analysis are involved to check the robustness of our results. Sensitivity analysis and alternative models aiming to help the investors to compare the results and identify the several decisions have to make according to their preferences for the implementation of the investment plan.

1.4 Rationale for the study and the contribution to the field

The 2030 climate and energy framework which adopted by the European Council includes EU targets and policy objectives for the period from 2021 to 2030. The Key targets for 2030 state that at least 40% cuts in greenhouse gas emissions (from 1990 levels), at least 32% share for renewable energy and at least 32.5% improvement in energy efficiency. In

3 order to meet the target of RES penetration in the domestic market, investments should be accelerated. Greece, in its initial policy planning for 2020, in order to accomplish its national targets in the EU context, placed particular emphasis to the photovoltaic systems, since the developmental conditions in the country are among the most favourable in Europe, due to high solar irradiation levels. Investment analysis can help determine how an investment in photovoltaic plants is likely to perform and how suitable it is for a potential investor. The key factors in investment analysis include the entry price, the duration of the investment and the role that the investment will play in the portfolio. The structure of the thesis as investment analysis gives feedback over the several alternatives scenarios as well as relevant information that potential investors would have to take into account for decision making.

1.5 Dissertation outline

The present dissertation consists by another four chapters. The second chapter is the review of the literature which examines the current situation of Renewable Energy Technologies in global market and future trends, the existing Photovoltaic Technologies, the Solar Panel Efficiency over time, the PV learning curve, the Greek PV market, SWOT analysis, the license procedure of PV projects in Greece according to legislation and description of the available options that potential investors have in this sector. The third chapter describes the Benchmark Model with the assumptions made, cost-benefit analysis, description of production process and the methodology used based on time value of money concepts and techniques. The forth chapter includes the analysis of the results of the Benchmark Model and sensitivity analysis with alternative models and scenarios. The worst and best case scenarios are identified contributing to decision making process. The fifth chapter concludes with the research findings of the dissertation, the research contribution and recommendations for future research and development.

4 CHAPTER 2: LITERATURE REVIEW

2.1 Renewable Energy

Renewable energy is called the energy source that is continually replenished by nature such as wind, sun, rain, waves, tides and geothermal heat. Renewable energy does not include energy resources from fossil fuels, waste products coming from the fossil sources or inorganic sources. The following Figure 2.1 shows an overview of renewable energy sources.

Figure 2. 1 Renewable Energy Sources, Source: Ellaban et.al, 2014

The Renewable energy technologies turns these natural sources into usable forms of energy i.e. electricity, heat and fuels.

2.1.1 History

Prior the development of coal in the mid of 19th century almost all energy used in the world was renewable. The traditional biomass used in order to fuel fires is the oldest known use of renewable energy which dates from more than a million years ago. The wind in order to drive ships over the water was another usage of renewable energy. Furthermore geothermal energy from hot springs has been used for bathing since Paleolithic times and for space heating since ancient Roman times. The primary sources of traditional renewable energy were the animal power, power of water, wind, windmills and firewood. In 1870s and 1880s there were already fears that civilizations would run out of fossil fuels and the need was recognized for better sources. In 1905 Max Weber mentioned the end of fossil fuel in the concluding paragraphs of his publication “The Protestant Ethic and the Spirit of Capitalism”. The development of solar engines continued until the outbreak of World War I. The importance of solar energy was recognized in a 1911 by the Scientific American article: "in the far distant

5 future, natural fuels having been exhausted (solar power) will remain as the only means of existence of the human race". In the 1970s environmentalists promoted the development of renewable energy as for an escape from the dependence on oil and the first wind turbines for electricity generation manufactured. Solar Energy had been used for heating but solar panels were too costly in order to build solar farms until 1980.

2.1.2 Global Overview

According to the data of REN21 2020 Global Status report, the estimated Renewable Energy Share of Global Electricity Production by the end of 2019 is 27,3% as shown in the following figure 2.2.. Hydropower still made up the majority (15,9%) of this estimated generation share of Renewable electricity, followed by wind power (5,9%), solar PV (2,8%) and bio-power (2,2%).

Figure 2. 2 Estimated Renewable Energy Share of Global Electricity Production, Source: Data from REN21 2020 Global Status report The worldwide investment in renewable power and fuels in 2019 was estimated 301,7 billion USD totalled and this was an 5% increase from the previous year. Investment in Renewables was mainly in solar PV and wind power. Globally there are an estimated 11 million jobs associated with the renewable energy industries (directly and indirectly) in 2018, with solar photovoltaics being the largest renewable employer (estimated 3,6 million jobs).

6 Pathways of “decarbonisation” and frameworks continued to be developed during the year 2018. The EU presented its long-term climate strategy to be carbon-neutral by 2050. An increasing number of countries also have adopted plans to phase out the use of coal for power generation, or the economy-wide consumption of fossil fuels.

2.1.3 Market and Industry Trends

The following figure 2.3 presents the Renewable Power Capacity for the year 2019 according to the data presented in REN21 2020 Global status Report.

Figure 2. 3 Renewable Power Capacity 2019, Source: Data from REN21 2020 Global Status report Hydropower In 2019, the estimated worldwide renewable hydropower capacity was 1.150GW. Hydroelectric energy is a force derived from the energy of moving water. Flowing water creates energy that can be captured and converted into electricity using turbines. The most common form of hydroelectric power is dams, although newer forms of wave and tidal power are becoming more common. Brazil led the way in launching new hydroelectric power plants in 2019, followed by four Asian countries, including China. This marked the first year since at least 2004 that China is not holding the lead over all other countries for new investments in hydropower. The hydroelectric industry has continued to face challenges and opportunities in a world of changing energy systems and priorities.

7 Wind Power In 2019, the worldwide installed capacity of wind power was 651 GW. Wind energy is defined by the conversion of wind energy into a useful form such as the use of wind turbines to generate electricity. Modern wind turbines of the utility scale range from about 600 kW - 9 MW of rated power. The power available from the wind is a function of the wind speed cube, so as the wind speed increases, the power increases to the maximum efficiency for the particular turbine. The preferred locations for wind farms are areas where winds are stronger and more stable such as high altitude and offshore areas. The rapid growth was due to new investments in China and United States before the policy changes and a significant increase in Europe despite the continuing market in Germany. Offshore Wind energy is playing an increasingly important role, accounting for a record 10% of 2019 installations. Wind power accounted for around 57% of Denmark's electricity generation in 2019, with high shares also in Ireland (32%), in Uruguay (29.5%), Portugal (26.4%) and many other countries. Solar Energy In 2019, the worldwide installed capacity of solar energy was 627 GW. Solar energy is received as packets of energy radiation called photons of different energy. When solar photons are absorbed into a semiconductor material, they deliver their energy to excite the electrons, which are involved in bonds between the atoms that make up the material, in a state of higher energy. Solar energy generation includes the use of solar energy to supply hot water through solar thermal systems or electricity through solar photovoltaics (PV) and solar energy collection systems (CSP). These technologies are technically well proven with many systems installed around the world in recent decades. Solar photovoltaic systems (PV) directly convert solar energy into electricity. The photovoltaic effect is described in section 3.4. In most countries, there is still a need for support systems for solar photovoltaics, as well as adequate regulatory frameworks and policies governing grid connections. However, interest in purely large-scale competitive systems is growing rapidly, with many projects under construction. Corporate markets grew significantly in 2019 and self-consumption (increasingly with battery storage) was a major factor for new distributed systems in many countries, including Australia and Germany. During the year, solar photovoltaics accounted for about 10.7% of total production in Honduras and significant shares also in Italy (8.6%), Greece (8.3%), Germany (8.2%). ), in Chile (8.1%) and elsewhere. China continued to dominate the world market as well as manufacturing, having a significant influence on both.

8 Bio-energy In 2019, the worldwide installed capacity of Bio-energy global was 139 GW. Biomass is the term used for all organic materials derived from plants, trees and crops and is essentially the collection and storage of solar energy through photosynthesis. Biomass energy (bio-energy) is the conversion of biomass into useful forms of energy such as heat, electricity and liquid fuels (biofuels). Bio-energy provides about 9% of industrial heat demand and focuses on biological industries such as paper and cardboard. Biofuels, mainly ethanol and biodiesel, provide about 3% of transport energy and global biofuel production increased by 5% in 2019. The United States is the largest producer of ethanol. Indonesia became the largest producer of biodiesel in the world in 2019. In the field of electricity, China has expanded its lead as the largest producer of the country. Notable trends in the bio-energy industry included the continued increase in the production of wood pellets. A CHP power station uses wood to supply 30,000 households in France. Geothermal energy In 2019, the worldwide installed capacity of geothermal energy capacity was 13.9 GW. High temperature geothermal energy comes from thermal energy produced and stored inside Earth. Geothermal energy is a powerful and efficient way to extract renewable energy from the earth through natural processes. This can be done on a small scale to supply heat to a home unit using a geothermal heat pump, or on a large scale to generate energy through a geothermal plant. Geothermal energy is considered an economically efficient, reliable and environmentally friendly energy source. The direct use of geothermal energy for thermal applications has increased by an average of 8% in recent years, with the fastest growing sector being space heating. Among the most active markets are the regions of Europe and China, which show the fastest expansion. Four countries, namely China, Japan, Turkey and Iceland accounted for about 75% of total geothermal use in 2019.

2.1.4 Benefits of Renewable Energies Production

According to Ellaban et.al, 2014, Renewable Energy provides political, environmental, social, technological and economic benefits as shown in figure 2.4.

9 Political: Governments have enacted renewable energy (RE) policies to meet a number of objectives including the creation of local environmental and health benefits, energy access particularly for the rural areas, advancement of energy security goals by diversifying the portfolio of energy technologies and resources, improving social and economic development through potential employment opportunities.

Figure 2. 4 Benefits of Renewable Energy Production, Source: Ellaban et.al, 2014

Environmental: Renewable energy contributes to greenhouse gas emissions, it is not a finite resource, so its use can be sustained renewable energy largely avoids the environmental effects that have made fossil fuels. Social: According to U.S. Energy and Emplοyment Report the Renewable energy has been more effective in creating jobs than coal or oil for example in the United States. In 2016, employment in the sector increased 6 percent in the United States, causing employment in the non-renewable energy sector to decrease 18 percent.

10 Technological: Continued technological innovation and cost reductions in energy generated with renewable sources. Economic: Renewable energy technologies require less overall maintenance than generators that use traditional fuel sources. By using renewable energy can help consumers to save money from their energy bills.

2.1.5 Barriers to Renewable Energy technology deployment

The challenges involved with deploying renewable energies can be summarized in figure 2.5. There is an economic barrier if the cost of a RES technology exceeds the cost of competing alternatives with a direct link between technical and economic barriers. All other types of barriers are considered non-economic, although these barriers play an equally important role in shaping the cost of RES. The importance of barriers varies for each technology and market and the priority changes as technology matures on the path to commercialization (Ellaban et.al, 2014).

Figure 2. 5 Barriers to deployment of Renewable Energy, Source: Ellaban et.al, 2014

11 2.1.6 Future Projections

The prices of renewable energy technologies are decreasing due to technological innovation, mass production advantages and market competition. According to a report by the International Renewable Energy Organization (IRENA) in 2018, the cost of renewable energy is declining rapidly and is likely to be equal to or less than the cost of fossil fuels by 2020. The report also found that the cost of solar energy has dropped by 73% and onshore wind costs dropped by 23% since 2010. The Energy Information Association (EIA) has predicted that almost 2/3 of net capacity additions will come from RES by 2020 due to the combined policy on mitigation, energy diversification and “decarbonisation”. According to the Bloomberg New Energy Outlook 2019 report, wind and solar energy are expected to generate almost 50% of global electricity by 2050. Renewable energy is also the most economical solution for new grid-connected capacity in areas with good sources.

2.2 Why Solar Energy? Why Photovoltaics?

There are certain indications that could enhance potential investors to invest in PV projects instead of other projects in RES. Solar energy is widely available and inexhaustible and PV panels could be easily installed in every flat surface. Furthermore, as shown in figure 2.6, the photovoltaic solar electricity potential in Greece and other Mediterranean Countries is higher than other European countries due to their geographical position. The estimated annual solar electricity generated by 1KWp with modules mounted at optimum angle in Greece varies from at least 1.150 KWh/KWp in North Greece to 1.500 KWh/KWp in South Greece respectively as shown in figure 2.7 (KWp is a measure of the peak output of installed PV system). In fact, according to real data collected by installed PV systems, the annual solar electricity generated by 1KWp PV system with modules mounted at optimum angle arises to 1.700 KWh/KWp in South Greece.

12

Figure 2. 6 Electricity Potential of Photovoltaics in European Countries Source: European Commision, JRC, PVGIS These levels are remarkable and may be efficiently exploited for PV projects. Moreover PV investments have been realized in other European countries with lower electricity generation potential. On the other hand, the sources of input of other RES can be exhaustive or constraints exist such as the inevitably high levels of dynamic wind energy production or the large surface area requirements for biomass exploitation. PV projects are technically implemented faster and easier, compared to other RES projects. The basic equipment of PV systems consist of photovoltaic panels, mounting system (fixed – angle or tracking system), inverters for conversion of Direct Current (DC) produced by the PV panels to Alternative Current (AC) and other electrical equipment. On the other side, wind farms or hydroelectric projects require complex constructions in often isolated and inaccessible areas such as mountains, rivers, etc.. In addition to the increased difficulties these requirements usually lead to a significant increase in project costs. PV projects operate with little human occupation as the need for maintenance and supervision is minimized by technological developments such as remote monitoring of energy production in real time. Remote monitoring reduces the administrator’s time has to devote to controlling the day-to-day operation of the PV system. The only input material of the

13 photovoltaic system is solar energy, which is inexhaustible and widely available in Greece, as shown by Figure 2.7. According to photovoltaic effect, solar energy is converted into electricity with the help of photovoltaic panels. Photovoltaic panels produce direct current (DC). There is a device called inverter which converts DC current to AC current. The production process is explained in detail in section 3.4.

Figure 2. 7 Solar electricity generated per KWp with PV modules mounted at optimum angle, Source: European Commision, JRC, PVGIS

The fact that solar energy is abundant in Greece increases the potential for financial viability of the project. In addition, the change in the intensity of solar energy during the summer months is considered particularly positive for the investment plan, as we identify high levels of energy consumption in the country during this time period. There is evidence that there are two peaks of electricity demand in December-January and July in Mediterranean countries. During the summer period usually there is higher demand for electricity consumption due to operation of air-conditioning systems.

2.3 Photovoltaics’ Technology

A PV panel is an assembly of solar cells mounted in a framework for installation. Solar cells use sunlight as a source of energy and generate DC electricity.

14 In the world of PV solar power there are many kinds of PV panel technologies for investors to choose from. Two main types of PV technology are currently available in the market: (a) crystalline silicon-based PV cells and (b) thin film technologies made out of a range of different semi-conductor materials, including amorphous silicon, cadmium- telluride and copper indium gallium diselenide. Crystalline silicon modules (c-Si) are dominating the PV market nowadays representing over 95% of worldwide installed PV capacity. There are two main types of crystalline silicon panels: • Monocrystalline PV modules use solar cells that are cut from a piece of silicon grown from a single, uniform crystal. Monocrystalline modules are the most efficient. Multicrystalline PV modules use solar cells that are cut from multifaceted silicon crystals. They are less uniform in appearance than monocrystalline cells. These are less efficient although the performance gap has begun to close in recent years.

Figure 2. 8 Solar Cells, Source: https://www.energysage.com • Thin film PV panels are created by depositing a thin layer of conductive material onto a backing plate made of glass or plastic. Thin film PV panels typically don’t see use in residential installation because due to lower efficiency than monocrystalline or polycrystalline PV panels. The majority of PV panels deployed today are made from either monocrystalline or solar cells (J. Nelson et.al, 2014). However, crystalline silicon “Passivated Emitter and Rear Contact” solar cells, known as PERC solar cells, are becoming more common today as an option for making PV panels. PERC solar cells are modified conventional cells that enable the cells to produce 6 – 12% more electricity than conventional solar panels. PERC solar cells have an extra layer within the back side of the

15 cell. This allows some of the sun’s rays to reflect back into the , giving them another opportunity to be turned into energy. The next technology on that mainstream path is half-cell designs. The 9th edition of the International Technology Roadmap for Photovoltaic (ITRPV) predicts the market share of half cells will grow from 5% in 2018 to nearly 40% in 2028. Half-cell modules have solar cells that are cut in half, which improves the module’s performance and durability. According to the 11th edition of the International Technology Roadmap for Photovoltaic (ITRPV) it is estimated that the market share of monocrystalline silicon (mono-Si) wafers in 2020 will be close to 75 percent and will continue to grow. In contrast, the market share of multicrystalline silicon wafers will shrink continuously from about 20 percent in 2020 down to only 5 percent until 2030. Furthermore, the 2019 dominating wafer format of 156.75 x 156.75 mm² will disappear within the next 3 years and will be replaced fast by larger formats. Future mainstream will be formats of 166.0 x 166.0 mm² (M6) or even larger ones like 210.0 x 210.0 mm². The continued roll out of PERC cell technology and the implementation of half-cell module technology enabled higher performing module products in 2019. Due to the current diversification in wafer formats the module dimensions are also changing. The comparison of different module types only by the common module label power may be misleading as module powers of ≥ 500 Wp are possible today with existing cell technologies by using larger wafer formats.

2.3.1 Solar Panel Efficiency over time

Solar cell efficiency refers to the portion of energy in the form of sunlight that can be converted via photovoltaic into electricity by the solar cell. For example a PV panel with 17% efficiency and an area of 1 m2 will produce 170 KWh/year at Standard Test Conditions (STC). The first solar cells, invented in the 1800s, were less than one percent efficient, not enough to make them a useful source of energy. In 1954 Bell Labs invented the first useful silicon solar panel, which was about 6% efficient. Since then, solar photovoltaic technology has evolved rapidly. Manufacturers have been able to create solar panels that are nearly 30% efficient, and homeowners at the Energy Sage Solar Marketplace regularly receive offers on solar panels that are 19 to 21 percent off by solar installers. These high-performance panels can generate 25% more electricity than the lower-end economy panels that have dominated the market in recent years.

16 The technological evolution further increases the efficiency of the solar PV panels. The researchers were able to achieve 46% efficiency in some laboratory tests using advanced cell structures. However, extremely high performance panels are usually made from more expensive materials and therefore are not currently cost effective.

2.3.2 PV Learning Curve

The cost reductions in PV production process will result in price reductions. The figure 2.9 shows the learning curve for module price as function of cumulative shipments. It is displayed on log-log scale. The plot changes to an approximately linear line until the shipment value 3.0 GWp which corresponds to shipments at the end of 2013. This indicates that for every doubling of cumulative PV module shipment the average selling price decrease according to learning rate (LR). The large deviations from LR plot in figure 2.9 are caused by market fluctuations between 2003 -2012. According to ITRV 11th edition the average module price at the end of 2019 is calculated to 0,23 USD/Wp.

Figure 2. 9 The learning curve of photovoltaics, Source: (ITRPV, 2018) (Wikipedia,2020)

According to Swanson’s Law the price of solar PV modules decreases by about 20% for every doubling in global capacity. Further comparison with reduced costs and different choice of PV technologies that lead to different results are included in chapter 4 with the model alternative inputs of sensitivity analysis.

17 2.4 Greek PV Market

Greece has made progress in diversifying its electricity generation fuel mix since the recent years. Currently there isn’t any dominant fuel in the generation mix. The Renewable Electricity production stands at 21% of the total electricity production in Greece in 2018 as it is presented in figure 2.10.

Figure 2. 10 Renewable Energy Share of Greece’s Electricity Production in 2018, Source: Eurostat, HAEE’s Analysis The lignite generation is expected to decrease because the lignite power plants retire and the RES as well as the Natural Gas power plants expected to increase further their capacity during the next years. In 2018, RES and Hydroelectric power plants’ capacity contributed around 50% of the total installed capacity as shown in figure 2.11.

Figure 2. 11 Installed Capacity of Renewable Energy Sources (MW) Greece, Source: Eurostat, HAEE’s Analysis

18 The development of solar power in Greece started in 2006 and installations of photovoltaic systems developed rapidly from 2010-2013 because of the appealing Feed in Tariffs (FITs) financial mechanism scheme introduced by the government and the corresponding regulations for domestic applications of rooftop solar PV. The vast majority (90%) of the installed Photovoltaic power plants with total power 2.5 GWp was installed in years 2011, 2012 and 2013. However, the practice of funding the Feed – in – Tariffs (FITs) resulted to an unacceptable deficit of more than €500 million in the Greek RES special Account .This special account (RES Special Account) was created to administer the Feed in Tariff (FIT) program whose cost amounted to around EUR 1.7 billion per year in 2014 and 2015 (with a peak of EUR 2 billion in 2013). Under the old program (valid till August 2016), there were delays of up to eight months in the payment of FiTs to developers, and an accumulated deficit in the RES special account. New regulations were introduced in August 2012 in order to reduce that deficit including retrospective feed-in tariffs reduction with further reductions over time. These measures enabled the deficit to be erased by 2017. A new support scheme for Renewable Energy Projects has been adopted according to Law 4414/2016 based on Feed – on – Premiums (FIPs) since 2016. Auctions have replaced FITs after stagnating since 2013. In 2019 the PV market showed the first sign of recovery as it is presented in figure 2.12. The cumulative PV installation power capacity for self-generating systems was 2828MWp in 2019 corresponding to an increase of around 6% compared to the previous year.

Figure 2. 12 Greek PV Market – Installation Power (MWp), source: hellapco.gr

19 At the end of 2019, the National Plan for Energy and Climate was finalized, which provides the following in terms of the development of photovoltaics:

Targets for 2016 2020 2022 2025 2027 2030 photovoltaics Total installed power (GWp) 2,6 3,0 3,9 5,3 6,3 7,7 Photovoltaic energy 3,9 4,5 6,0 8,2 9,7 11,8 production (TWh) Participation of photovoltaics in 8,1% 8,7% 11,3 15,1% 17,7% 20,7% total electricity % generation Table 2. 1 Targets for PV installations

2.4.1 Legislative Framework

With the current regime of strengthening renewable energy sources (Law 4414/2016) in Greece, aid for medium and high power projects (valid for 20 years) is granted as a differential surcharge, in addition to the market price at which producers sell electricity directly in the market, i.e. the support mechanism of guaranteed differential prices (feed in premium) applies. In addition, grants for projects of this scale are granted under a competitive process. With the Law No. 4602/2019, the Ministerial Decision No. 30971/1190 (Government Gazette 1045/B/26.3.2020) and the Act of Legislative Content 30.3.2020 (Government Gazette 75/A/30.3.2020) new reference prices (selling prices of the produced energy) were set for the projects that do not participate in auctions. Specifically, in 2020 and until 30/4/2021, the reference prices for this category of projects will depend on the results of previous competitive procedures, while from 1/5/2021 these prices will be adjustable and stable.

20 Net - Metering Along with the establishment of new mechanisms for strengthening photovoltaic stations, in the last four years there has been a series of legal regulations for self-generation with net- metering for energy projects up to 1 megawatt (MWp), as well as for Energy Communities. The development of PV stations by self-consumers with net metering was established in 2013(Net Metering and Virtual Net Metering), while the most recent regulation is the ministerial decision No 15084/382, Government Gazette 759B / 5.3.2019 and concerns the installation of PV stations (with or without energy storage) to meet the same needs of electricity consumers by implementing energy netting. Net metering is an electricity billing mechanism that allows consumers who generate some or all of their own electricity to use that electricity anytime, instead of the moment it is generated and it is carried out on a three-year basis. With Net-Metering, the energy produced does not have to be synchronized with the energy consumed. It concerns a PV station which is installed in the same or adjacent space as the consumption installation (virtual net metering), which is connected to the utility grid through the same supply number.

Figure 2. 13 How Net Metering Works, Source: https://www.cedgreentech.com

In particular, for self-consumers who are legal entities under public or private law that seek public or other public interest purposes of general or local scope, for those registered in the Register of Farmers and Agricultural Holdings of Law No. 3874/2010 as in Article

21 151 (A '151) for facilities Law 3874 / 2010 or agricultural uses, as well as for energy communities. Based on Law 4414/2016 and Law 4513/2018, the installation of photovoltaic stations is allowed in order to meet their own needs and by applying virtual net metering. Virtual Net - Metering Virtual Net-Metering means the offsetting of electricity generated by RES stations, with the total electricity consumed in the facilities of the self-producer, of which at least one is either not in the same or adjacent space with the RES station or if it is located, it is powered by a different supply. Especially, for the Energy Community, the offsetting of the generated electricity from a RES station is done with the total consumed electricity in facilities of members of the Energy Community and vulnerable consumers or citizens living below the poverty line within the Region, where the basis of the Energy Community lies. In the Non-Interconnected Islands, the photovoltaic station will be installed in the same Regional Unit and in the same electrical system as the consumption facilities to which it corresponds. So, nowadays, the options for someone who wants to invest in photovoltaics are either to sell the electricity generated to the network or to install a self-generating system to cover part or all of their electricity consumption.

2.4.2 License Procedure

Since the end of 2019, the process of simplifying the licensing process has begun with the first step being the replacement of the Production License by the Certificate of Electricity Producer. The Certificate will be issued after a short and automated process of checking the application, with a minimum reduction of the required supporting documents. The Certificate of Electricity Producer retains the character of an administrative act and certifies the capacity of the Producer, while it is a basic identity of the project and secures the position of the station. Applications are submitted electronically from the first to the tenth day of the months of February, June, October (application cycle). The completion of the examination of the applications of the same cycle is a prerequisite for the examination of applications for the next cycle. According to Law 3851/2010, no production license is required (hereinafter Certificate of Electricity Producer) or other certification decision for photovoltaic

22 systems up to 1 megawatt (MWp). For PV systems with a power greater than 1 MWp, a Certificate of Electricity Producer is required. For systems that require a Certificate of Electricity Producer, an installation permit and operating license are also required to issue (issued by the competent Decentralized Administration). In the context of simplifying licensing procedures, it is very likely that these licenses will also be significantly abolished or simplified (this is expected within 2020). Also, environmental licensing is not required for systems installed in buildings and organized industrial activities. For PV systems installed in land parcels no environmental licensing is required for systems up to 500 KWp if certain conditions are met. For these systems, a special environmental exception (“certificate of exemption from Approval of Environmental Terms”) is required from the competent Region, which, according to the law, is given within 20 days from the submission of the relevant application. For those systems that are installed in land parcels, Approval of Environmental Terms is required if they are installed in Natura 2000 areas, coastal zones (100m from the seashore boundary) and in land parcels adjacent to less than one hundred and fifty (150) meters, with another land for which a production license has been issued or Approval of Environmental Terms decision or Photovoltaic Station Connection Offer and the total power of the stations exceeds 500 KWp. Ministerial Decision No.3791/2013 (Government Gazette 104/B/24-1-2013) defined "Standard Environmental Commitments” (PPD) for RES projects, which standardize and simplify the environmental licensing of photovoltaic projects. The connection agreements concluded by the competent Administrator with the photovoltaic station operators exempted from obtaining a production license shall specify a time limit for connection to the System or Network, which is exclusive, and shall specify a guarantee or penal clause that falls within the application if the entity does not realize the connection in the specified deadline. The amount of the letter of guarantee is set, per nominal unit of demand in kilowatts (kW) as follows: forty-two euros per kilowatt (42 euros / kW) for the power section up to one megawatt (1 MW), twenty-one euros per kilowatts (21 euros / kW) for the power section from one to ten megawatts (1 to 10 MW), fourteen euros per kilowatt (14 euros / kW) for the power section from ten to one hundred megawatts (10 to 100 MW ) and seven euros per kilowatt (7 euros / kW) for the power section over a hundred megawatts (100 MW). This guarantee exempts all projects related to installations in buildings regardless of force (L.4152 / 2013, Government Gazette 107A / 9-5-2013). When the Production License is formally abolished and the implementation of

23 the scheme begins with the Certificate of Electricity Producer, the amount of the above letter of guarantee is expected to fall to 50% of the above amounts. Especially for those who participate in tender procedures, a Guaranteed Letter of Participation in the Competition is required to ensure its good and efficient conduct. The amount of the above Guaranteed Letter of Participation submitted for participation in the Competitive Procedure, amounts to 1% of the total investment, considering, as a basis for calculation, that the cost of a standard project of photovoltaic installation is estimated at the amount of 1,000 € / kW of installed capacity of the photovoltaic installation. That is, the amount of this Guaranteed Letter of Participation is estimated at € 10 / kW of installed capacity of the photovoltaic installation participating in the Competitive Process. These Guaranteed Letters of Participation of the Participants that will not be selected for inclusion in a support regime in the form of Operational Aid, are returned immediately after the issuance of the RAE decision regarding the results of the Competitive Procedure. To ensure the implementation of the project, for each Eligible Participant, a letter of guarantee is also submitted to RAE, amounting to 4% of the total investment, including 1% of the Guaranteed Letter of Subscription to the Participated Contract (excluding any System or Network). An issue that has preoccupied many investors in the past is the installation of photovoltaics in highly productive fields. For this issue, the following is provided (Article 24 of Law 4643/2019): as well as the areas of the Territory that have already been defined as agricultural land of high productivity by approved General Urban Plans (GIS) or Plans of Spatial Housing Organization of Open City (S.X.O.O.A.P.) of Law 2508/1997 (A ´ 124), in Residential Control Zones (Z.O.E.) of article 29 of Law 1337/1983 (A ´ 33) and in Local Spatial Plans of Law 4447/2016 (A ´ 241), on the condition that the photovoltaic stations, for which binding connection offers are granted by the competent Administrator, cover agricultural land that is added to the agricultural areas covered by photovoltaic stations that have already been put into operation or on the condition that binding connection offers have been provided along with the areas covered by photovoltaic stations installed in accordance with paragraph 11 of the article 51 of Law 4178/2013 (A ´ 174), do not exceed 1% of the total cultivated areas of each Regional Unit ”. Otherwise, the installation of photovoltaic plants with a capacity of more than 1 MW on plots of land characterized as agricultural land of high productivity is prohibited.

24 Due to the large number of applications for Connection Offers by HEDNO and the abuse of priority that was initially given to Energy Communities, in March 2020 a new framework was set for the priority in offering connection terms.

2.4.3 SWOT Analysis

According to the secondary data about the RES and the PV market in Greece which collected by the Hellenic Association of Photovoltaic Companies (2020) as well as by relative studies such as an empirical SWOT analysis of Residential Grid- Connected Photovoltaic Power systems in China (Qianyu Dong, Tohru Futawatari, 2014), what follows is an attempt to analyze the internal and external factors which impede or facilitate the evolution of grid – connected PV power plants in Greece. A key tool to analyze national sustainable development is SWOT analysis as it was originated from business management literature. “SWOT” is the abbreviation for capital words of “Strengths”, “Weaknesses”, “Opportunities” and “Threats”. “Strengths” and “Weaknesses” are considered as internal factors while “Opportunities and “Threats” are external factors. The internal factors are referred to industry’s internal characteristics such as resources, skills and assets an industry has which made this industry different with its competitors and these are controllable. The external factors such as political, economic, social and legal cannot be directly controlled by the industry (Qianyu Dong, Tohru Futawatari, 2014). The SWOT analysis of developing PV power plants in Greece is presented in the following figure 2.14. Strengths: The photovoltaic solar electricity potential in Greece and other Mediterranean Countries is higher than other European countries due to their geographical position. The levelized cost of new PV energy is lower than lignite and gas-fired power stations. The price of solar PV modules decreases by about 20% for every doubling in global capacity. The technological innovation results to higher PV efficiencies.Solar energy can help to mitigate carbon emissions by replacing more carbon intensive sources. Greece have many experienced companies and staff with know- how in installing and delivering PV projects. Furthermore, PV systems provide flexibility and convenience and enhance the economic income.

25 Weaknesses:

PV systems are susceptible to natural conditions. PV performance depends from the environmental conditions. Technical barriers mainly due to relatively low efficiency level although there is continuous technological progress. For example the installation of PV system with capacity 500KWp requires the occupation of land parcel with area at least 10.000 – 11.000 m2 .Economic barriers exist mainly due to high initial investment costs, interest rates, tax rates, repair costs and payback period.

Strenghts Weaknesses - Abundant Resource. - Susceptible to natural conditions. - Lower levelized cost of new PV energy - Technical barriers. than lignite and gas-fired power stations. - Economic barriers. - Cost Reduction of PV modules. - Technological Innovation resulting to higher PV efficiencies. - Environmental Benefits. - Experienced companies and staff with know- how in installing and delivering PV projects. - Flexibility and convenience. - Economic Income.

Opportunities Threats

- Long – term energy planning is underway. - Inability of existing local networks to Preliminary targets for cumulative PV absorb the capacity of RES capacity till 2030: 7,7GWp. especially when it comes to high - Greek Banks offer loans to financing PV voltage network extensions. investment projects. - Time-consuming procedures for - Self- consumption scheme (Net-Metering) obtaining certificates and licences in place for residential and commercial PV from various public services. systems up to 1MWp. - Lack of funds. Although the cost of - The EU target model will become effective installing various PV systems is in Greece. Then Corporate Purchage declining rapidly the high acquisition Aggreements (PPAs) will become also cost hampers their further expansion effective opening new opportunities for PV to large scale investments. investors. Many industrial consumers are - The citizens are not sufficiently looking forward this new business model. educated about the need to develop - PV plus storage market, the regulatory RES and their impact to framework for storage is expected to be environmental issues. finalized in 2020. - Synergies with heat pumps and or electromobility. - New Jobs creation.

Figure 2. 14 SWOT matrix of developing PV Power Plants in Greece

26 Opportunities:

Long – term energy planning is underway in European and National Level. The preliminary targets for cumulative PV capacity till 2030 are targeted to 7,7GWp. Greek Banks offer loans to financing PV investment projects covering up to 80% of the initial investment cost. Self- consumption scheme (Net-Metering) is in place for residential and commercial PV systems up to 1MWp. Synergies with heat pumps for heating and cooling and or electrical mobility could save money from electricity bills and fuels. The EU target model it is expected to become effective in Greece. Then Corporate Purchase Agreements (PPAs) will become also effective opening new opportunities for PV investors. Many industrial consumers are looking forward this new business model. PV plus storage market, the regulatory framework for storage is expected to be finalized in 2020. Another opportunity is the creation of thousands jobs in RES sector that would contribute to the reduction of country’s unemployment rates. Threats:

The inability of existing local networks to absorb the capacity of RES especially when it comes to high-voltage network extensions. For example the grid network of Peloponnese has not enough space for the connection of RES Power Plants unless the completion of technical works aiming to upgrade the grid network. Another threat is the time-consuming procedures for obtaining certificates and licenses from various public services. Although the cost of installing various PV systems is declining rapidly the high acquisition cost hampers their further expansion to large scale investments According to M. Koutroumpi, I. Saltaoura (2016) the citizens are not sufficiently educated about the need to develop RES and their impact to environmental issues.

2.5 Financial Billing Mechanisms According to the Greek legislation, there are currently 3 ways to use renewable energy in a building/ land parcel: • By installing a renewable energy system, consuming as much power is produced, whilst being also connected to the utility grid (net-metering or virtual net-metering).

27 • Self-generation by selling up to 20% of the energy produced (concerns companies). • Sale of all energy produced from a PV power plant to the grid. 2.5.1 Net- Metering and Virtual Net -Metering

The net metering and virtual net metering billing mechanism applies throughout the Greek territory as follows: A. In the Interconnected System (mainland and islands connected to it) a) The installed power of each photovoltaic system can be up to 20 kilowatts (kWp) or up to 50% of the agreed power of the consumption installation (in KVA), if the last size exceeds 20 KWp. b) Especially for medium-voltage self-generators, legal entities, public or private law, pursuing public or other public interest purposes, general or local, and Energy Communities, the installed power of each photovoltaic system may amount to up to 100% of the agreed validity of all offset consumption c) In any case, the maximum installed power of a photovoltaic system to be installed cannot exceed the limit of 1 MWp. B. In the Non-Interconnected Islands a) In the Non-Interconnected Islands, the installed power of photovoltaic systems can be up to 10 kWp and especially in , up to 20 kWp or up to 50% of the agreed power of the consumption installation (in kVA), if the last size exceeds 10 kWp or for Crete 20 kWp. b) Particularly, for medium-voltage self-generators, legal entities, public or private law, pursuing public or other public interest purposes, general or local, and Energy Communities, the power of each photovoltaic system may amount up to 100% of the agreed validity of all offset consumption. c) In any case, the power of the production stations installed in each electrical system of the Non-Interconnected Islands, will be counted in the current validity margin per technology of production stations of this system, according to the relevant decisions of RAE. These photovoltaic systems can be installed on buildings or on land, or other constructions, including those of the primary sector (agricultural warehouses, livestock units, etc.) in accordance with current urban planning legislation.

28

Figure 2. 15 Ground mounted and Roof-top PV Systems

The following table 2.2. Summarizes the main amendments brought about by the Ministerial Decision No.15084/382 (Government Gazette 759/B/05-03-2019) in relation to that in force in the past.

Description Until 5.3.2019 From 5.3.2019 and now on

General Installed Power 500 kW 1.000 kW 50% of the agreed 100% of the agreed power limit Special power limits electrical power 100% for for medium voltage consumers public entities and Energy Communities Special limits on non- Increased power limits per interconnected islands installation on large islands (Crete, Rhodes, Kos, Lesvos, Chios, Samos) All (photovoltaic, small wind Technologies Photovoltaics turbines, biomass / biogas / biofuels, small hydroelectric, geothermal, CHP) Energy Storage NO YES until 30 kVA Net Metering Low NO YES Voltage Grid/Μedium Voltage Grid Hybrid Technologies NO YES

Table 2. 2 Main amendments of legislation regarding PV installations

29 In general, the permitted facilities apply to fixed grounding systems installed on land, buildings or other structures (including those in the primary sector), while in the case of photovoltaic stations installed on the ground, the use of solar trackers is also permitted.

2.5.2 Self-gereration by selling up to 20% of the energy produced

The mechanism “Self-generation by selling up to 20% of the energy produced” concerns companies. The Greek Law 3468/2006, in art. 2, defines it as “self-generating electricity from RES. or CHP the Producer that produces electricity from RES units. or CHP, mainly for its own use and directs any surplus of this energy to the System or to the Network ”. The art. 13, provides that the compensation prices for the energy injected into the grid refer to the “surplus electricity available in the System or the Grid, which can amount to up to 20% of the total electricity generated by these stations, on an annual basis". These regulations were enriched with the article 3 of Law No. 4414/2016.

2.5.3 Sale of all generated energy to the grid

For PV systems with installed power from 500 KWp up to 1.000 KWp (1 MWp), the steps required are the Approval of Environmental Terms (AEPO) granted by the competent Decentralized Administration, the approval of Small- Scale Works by the Building Department, the Connection Offer with Terms by HEDNO ((Hellenic Electricity Distribution Network Operator) and the signing of the purchase agreement with Operator of RES & Guarantees of Origin (DAPEEP SA). For PV systems with power greater than 1 MWp, the steps required are the issuance of Certificate of Electricity Producer by R.A.E. (Regulatory Authority of Energy) and then an installation permit by the competent Decentralized Administration (which requires Approval of Environmental Terms (AEPO) for the cases that it is required), approval of small- scale works by the Building Department. Connection Offer with Terms by HEDNO (Hellenic Electricity Distribution Network Operator SA) or ADMIE SA (Independent Power Transmission Operator) for projects that will be connected to the High Voltage, signing of the purchase agreement with DAPEEP and finally issuance of an operating license by the competent Decentralized Administration. For projects that do not participate in tender procedures, the following, as it is presented in table 2.3, applies (Ministerial Decision of the Greek Ministry of Environment and Energy

30 No. 30971/1190, Government Gazette 1045B / 26.3.2020 and Act of Legislative Content 30.3.2020, Government Gazette 75A / 30.3.2020). Photovoltaic Investor Category Reference Price (€/MWh) 1.05 * weighted average Reference Price during Investors with projects <500 the previous 3 competitive bidding procedures for kWp that are put into the same technology. Today, and until a new operation (normal or trial) competition is held specifically for photovoltaics, from 1.1.2020 the Reference Price is 70.3 € / MWh. This price is valid until a new tender is held in 2020. Then, until 30/4/2021, it is set at € 65.74 / MWh. From 01/05/2021, the price stops to depend on the tender procedures and becomes regulated with a price set at 63 €/MWh. Energy Communities (for projects 1,1 * weighted average Reference Price resulting from ≤1MW) and professional farmers the previous 3 tendering procedures relating to this (for projects <500 kW) category photovoltaic stations, or if they have not been Projects that are put into operation carried out competitions in the category, in the same (normal or trial) from the publication technology. in the Official Gazette of Law Today, and until a new competition is held specifically 4206/2019 (9.3.2019) - "Category for photovoltaics, the Reference Price is 73.64€/MWh. 30" This price is valid until a new tender is held in 2020. Then, it is set at 68.87 €/MWh. From 1/5/2021, the price ceases to depend on the tender procedures and becomes regulated, with a price set at 65 € / MWh. Table 2. 3 Reference Price per PV investor category

The current institutional framework (Law 4414/2016, Government Gazette 149A / 9.8.2016) incorporates in national law the “Guidelines for state aid in the fields of environment and energy (2014-2020)” (2014 / C 200/01 ) of the European Commission. Based on the current aid scheme, the following applies to photovoltaics: Since 01-01-2016 and for projects with a power greater than 500 Wp the aids have been granted as a differential increase, in addition to the market price at which the producers sell the electricity directly on the market, ie the support mechanism of the guaranteed differential prices applies (feed -in - premium). In addition, aid for projects of this scale will be granted under a competitive process.

31 DAPEEP and HEDNO (as an administrator of the Interconnected Islands) check the “criterion” when evaluating the applications for operating aid contract out of competitive bidding procedures and if they find that the applicant, directly or indirectly according to the above, has already concluded two (2) contracts of operational support other than competitive bidding procedures reject the application. The criterion is not checked for photovoltaic stations, which have submitted an application for a connection offer until 28.2.2019. According to article 26 of L.4643 / 2019, which concerns the harmonization with the Regulation (EU) 2019/943 of the European Parliament and of the Council of June 5, 2019 regarding the responsibility of balancing RES stations, since January 1, 2020, plants with an installed capacity or a maximum output power of more than or equal to 400 kW, the holders of which have entered into a Fixed Price Operational Aid Contract and which have been in operation (normal or test) since July 4, 2019 onwards, are responsible for the discrepancies they cause ("balancing responsibility"). For projects of less than 400 kWp, the same applies as for projects of 500 kWp, with one exception. Projects over 400 kWp will have to work with a Cumulative Representation Body that will represent them in the market to meet the "balancing responsibility". At the same time, Article 20 of Law 4643/2019 gave, for the first time, the possibility of participation of RES stations in the wholesale electricity market without operational support, while Article 21 defined the terms and procedure for granting individual assistance to RES plants with a capacity of more than 250 MW after EU approval. These arrangements apply to large investments that either wish to participate in the Energy Exchange or enter into bilateral partnerships with large consumers, when the wholesale market in framework of the Target Model. Finally, with Ministerial Decision No. 30971/1190, Government Gazette 1045Β / 26.3.2020, the possibility is given again to domestic consumers to sell all the energy produced by photovoltaics in the network for a set price. The old program that concerned systems up to 10 kWp (and concerned, in addition to domestic and commercial consumers) ended on 31/12/2019. The new regulation concerns solar energy utilized with photovoltaic stations with installed power ≤6 kWp, which are connected to a home supply and belong to natural persons not tradesmen and the sale price was set at 87 € / MWh (8.7 minutes per kilowatt hour ). The details of the implementation of the new program is expected to be determined by a ministerial decision in 2020.

32 CHAPTER 3: RESEARCH METHODOLOGY

3.1 Introduction

In this chapter we give the necessary description of the methods and methodology used to conduct case study research in order to test the main hypothesis. The case study relates to the investment analysis of photovoltaic power plant in Greece. The methodology is based on time value of money concepts and techniques. Net Present Value, Internal Rate of Return, Payback Period calculations and Ratio Analysis are involved to check the robustness of our results.

3.2 Research Design

According to Bettis and Gregson (2001) research is a systematic, objective process, which includes gathering and analyzing valid and reliable empirical data. Valid data captures and answers the posed research question, while reliable data reproduces the same result in every trial, unconcerned of the researcher. The research design is the framework used to carry out the study efficiently. The design can be exploratory, descriptive or causal (Sreejesh et al., 2014) The case study, which is being used in this dissertation, is a type of descriptive research method. A case study involves making detailed observations about one specific case. The survey method is based on gathering information from individual for the purposes of describing the attributes of the larger population which the individual are members. Case study due to its unique characteristic of high methodological flexibility it should be regarded as a research strategy rather than a simple form of a research method (Dooley 2002). According to Perry (1998) the concept of positivism has to be the preferred paradigm of case study research. He based this on the following arguments. Firstly, case study research questions are generally contemporary and preparadigmatic. Secondly, the objectivistic view of realists simplifies the work of a case study research and moreover the commensurability of case study research fits the realist’s paradigm.

3.3 Case Study Research

The Benchmark Model is based up on the case study research for the development of Photovoltaic Power Plant, with installed capacity 498,75KWp (<500KWp) in Western

33 Greece Region at Regional Unit Of Ilia. The implementation of the investment project aims at the utilization of Renewable Energy Sources, i.e. solar energy, to generate electricity by using Photovoltaic Power Plant connected to the grid. The duration of the investment is 20 years and the financial billing mechanism that would be used is the "sale all the energy generated to the grid", as it was described previously in chapter 2, with sale reference price 0,063€/ΚWh. Electricity as an output product would be available for sale directly to the Operator of RES & Guarantees of Origin (DAPEEP SA). This mechanism has multilateral parameters that need to be analyzed in terms of financial efficiency. The basic equipment of our model would consist by silicon crystalline PV modules with fixed-angle mounting system, inverters and all other required equipment. In this paper we investigate whether the new policy and its possible development in the coming years continue to make the investment plan beneficial to the investors. In addition, we must take into account that the project contributes to the support of the country's goals for reducing CO2 emissions, the use of RES and the secure supply of electricity, ensuring a homogeneous supply in Greece. For PV systems with power up to 500 KWp the license procedure is more simplified than higher power projects as it is described in section 2.5.3. The cost reduction of PV systems during the last years would make this option suitable for medium-sized potential investors as the most proposed power capacity under the current investment environment. In addition, there aren’t any complete updated reports and forecasts for the future of a PV investment projects in Greece in the context of the new policy and the evolution of market indicators. The basic factors for the choice of the appropriate land parcel for the installation and operation of the PV power plant are: • The area of the land parcel which is required for the installation of the PV system is at least 10.000 – 11.000 m2. • Land Use Permission and all the necessary licenses or exemptions by the relevant authorities. • Free from shadow since these contribute to efficiency reduction. • South-orientation • Within close distance to Medium Voltage electrical grid. The area would provide investment opportunities for PV Power Plants after the expected upgrade of the electric grid of Peloponnese (due to capacity problems).

34

3.4 Instrument

The free and open access Photovoltaic Geographical Information System (PVGIS) software (available at https://re.jrc.ec.europa.eu/pvg_tools/en/#PVP ) is being used to estimate the Photovoltaic System’s performance. The initial investment cost was estimated through relative market search by collecting offers by Photovoltaic Companies and Installers for the required technical equipment and labour required for the implementation of the project. The Microsoft Excel is being used for the investment analysis calculations which are based on time value of money concepts and techniques.

3.4.1 Data Collection Process

PVGIS: the initial parameters for the fix - angle benchmark model

Following the PV technology comparison analyzed in chapter 2, for the Benchmark Model we assume that crystalline silicon panels of a nominal power of 285Wp with module efficiency 17,52%. These typical PV panels would have all the required certifications and would provide at least 12 years product warranty, limited linear power warranty: 12 years- 91% of the nominal power output, 30 years - 80% of the nominal power output. The dynamics of electricity generation depends on the climatic characteristics of the project site, the slope of the photovoltaic panels and the selected technology. As mentioned in the previous section, it is proposed to operate the project with Photovoltaic panels of crystalline silicon technology, with a nominal power of 285Wp. In addition to that the reference model we are constructing concerns a photovoltaic system with 1750 panels so that the total capacity is 498.75KWp. The choice of the number of PV panels is related to the fact that their price has been significantly reduced and the licensing process for projects with a total capacity of up to 500KWp is more simplified (approval of environmental conditions and production license is not required). The choice over the total capacity, as well as all the assumptions of the benchmark model are reviewed in the sensitivity analysis section, where we investigate the critical values for the economic viability of a photovoltaic power plant. The photovoltaic panels will be installed on fixed- angle mounting system. The input data to Photovoltaic Geographical Information System (PVGIS) software program is presented in table 2.1..

35

Input Data:

Location [Lat/Lon]: 37.676, 21.394

Horizon: Calculated

Database used: PVGIS-SARAH

PV technology: Crystalline silicon

PV installed [KWp]: 498.75

System loss [%]: 14

Simulation outputs: Slope angle [Β°]: 32 (opt) Azimuth angle [Β°]: 2 (opt) Yearly PV energy production [kWh]: 799263.59 Yearly in-plane irradiation [kWh/m2]: 2059.96 Year-to-year variability [kWh]: 20632.97 Changes in output due to: Angle of incidence [%]: -2.65 Spectral effects [%]: 0.62 Temperature and low irradiance [%]: -7.65 Total loss [%]: -22.21 Table 3. 1 Benchmark Model Input Data

The use of solar trackers will also be considered in the sensitivity analysis section. The trackers are accompanied by a monitoring system. The photovoltaic panels are installed in such a way that the trackers "follow" the orbit of the sun. In this way the best performance is achieved, i.e. with optimal angle and vertical irradiation on the panels for most hours of the day. The horizon is monitored even if the sky is cloudy, so that even low levels of radiation could be used to generate electricity. The detectors allow the amount of sunlight that reaches the photovoltaic panels to increase. It is noted that the use of trackers could increase electricity generation by an average of 35%. In our case electricity generation for both cases is calculated in Table 3.2.

36 According to the data obtained for similar photovoltaic projects in the area, the theoretically proposed percentage of losses given by this program is an underestimation of the actual efficiency. Most suppliers can offer a 90% system efficiency guarantee for the first 10 years and 80% for 25 years. The approximation of the percentage of losses proposed by the software is not very different from the reported losses, so we can take into account the losses of 80% for 25 years, provided that the project aims at long-term financial goals. Therefore, it is about 0,8% reduction of the generated electricity per year, which we incorporate in the financial report analysis.

Figure 3. 1 PVGIS: the initial parameters for the fix - angle benchmark model Source: https://re.jrc.ec.europa.eu/pvg_tools/en/#PVP Market Search

The implementation of the project requires the purchase and the installation of technical equipment. The potential investors would have to decide for the appropriate supplier and installer of the PV system. Following market research about the technical specifications of equipment, suppliers and installers of PV systems and collection of offers we estimated the indicative budget required for the implementation of the project targeting to the best value for money. Production Process

The photovoltaic effect is a process that generates electric current in a photovoltaic cell when it is exposed to sunlight. This effect makes PV panels useful since the solar cells within the panel convert solar irradiation to electrical energy. The photovoltaic effect was discovered by Edmond Becquerel in 1839. The solar cells are made up of two different types of semiconductors the p-type and the n- type - which form a p-n junction. By combining these two types of semiconductors an

37 electric field is formed in the region of the junction as the electrons move to the positive side -p and the holes move to the negative side -n. This elctric field causes the negatively charged particles to move in one direction and the positively charged particles to move in the other direction. Light is made up of photons that are small beams of electromagnetic radiation. These photons can be absorbed by a photovoltaic cell that composes solar panels. When light occurs at an appropriate wavelength in these cells, energy from the photon is transferred to an atom of semiconductor material at the p-n junction. This energy is transferred to the electrons of the material. This causes the electrons to jump to a higher energy state known as the conduction band. This leaves behind a "hole" in the valence band from which the electron jumped. The movement of the electron creates an electric current in the solar cell. A diagram of this process is shown in Figure 3.2.

Figure 3. 2 Photovoltaic Effect Source: https://energyeducation.ca/encyclopedia/Photovoltaic_effect Photovoltaic cells generate Direct Current. Then the inverters which are a type of electrical converters which convert the variable Direct Current output of PV solar panels to Alternating Current that can be fed into a commercial utility grid with relevant voltage and frequency as shown in figure 3.3 through medium - voltage transformers for larger scale installations. String Inverters have special functions adapted for use with PV arrays including Maximum Power Point Tracking (MPPT) and anti-islanding protection.

National Solar Electricity Energy PV Panels Inverters 3 – phase Electricity Transmision Network

Figure 3. 3 Production Flow Chart

38 3.4.2 Measurements

Performance

Considering that the PV system uses fixed- angle mounting system with optimum angle, the PVGIS software estimated that the yearly energy production is 799.263,59 KWh which means 1.602,44 kWh /kWp would be an average production of the PV system per year. The monthly energy output from fix-angle PV system and the monthly energy output from tracking PV system are both calculated by the PVGIS software as shown in table 3.2.

Monthly energy Monthly energy output from fix- Month output from tracking angle PV system PV system (KWh) (KWh)

January 44.998,5 58.397,3

February 46.912,41 58.835,4

March 66.396,31 84.209,2

April 74.199,71 97.633,3

May 81.736,72 115.277,4

June 82.532,12 123.530,8

July 88.610,02 133.542,9

August 86.790,22 122.671,4

September 74.073,81 98.276,2

October 60.750,31 77.591,9

November 48.723,71 62.842,4 December 43.540,11 56.424,7 Table 3. 2 Monthly level of generated electricity by the PV power plant (KWh) Source: https://re.jrc.ec.europa.eu/pvg_tools/en/#PVP According to the data collected we may conclude that the use of 2-axis solar trackers increase the electricity production by approximately 36% (fixed: 799.263,59 kWh per year, tracking 2-axis system: 1.089.232, 75 kWh per year). In chapter 4, we use this data for our sensitivity analysis for the 1st alternative model which is the use of 2-axis trackers instead of fixed- angle mounting system.

39 Initial Investment Cost

The following is a list of all the parts of the assumed technical equipment required for the implementation of the project, as well as their basic technical specifications and the corresponding costs, including transport and installation costs, as shown in Table 3.3. PV Panels

There are many offers of manufacturer companies for crystalline silicon PV panels with nominal power ≥285Wp. The manufacturer company should apply ISO 9001:2000: Quality management system, ISO14001:2004: Environmental management system which is reliable and provide panels with certification of quality (CE, IEC61215, IEC61730, IEC62716, IEC61701, etc). The relative search in the market (Q1 2020) concludes that the characteristics of the particular technology are appropriate for the size and location of investment. The PV panels would have at least high module conversion efficiency ≥17%, 60 solar cells, aluminum frame, high reliability against extreme environmental conditions, low degradation and excellent performance under high temperature and low light conditions, potential induced degradation (PID) resistance, positive power tolerance of ≥3% and temperature coefficient of Pmax ≤-41%/°C. Finally, the PV panels would have at least 12 years limited product warranty, limited linear power warranty: 12 years 90% of the nominal power output and 25 years 80% of the nominal power output. The cost of 1750 PV panels of that technology with nominal power 285Wp each is approximately 160.000, 00€, given that each panel costs 91,42 €. Fixed – angle mounting system

The efficiency of the PV system is affected by the angle between a photovoltaic panel and the sun. The solar PV ground mounting system is made of 100% aluminum which could be used together with ground screw or concrete foundation. The material is anticorrosive suitable for outdoor use, light, strong and easy for installation. It will be installed with south -orientation and fixed angle which in our case the will be set at 32° (optimum angle for best efficiency during the year). The mounting system would have at least 10 years warranty and will be certified. The pre- assemble main frame contributes to highly save the labor cost at the installation site. The cost of the fixed – angle PV mounting system is approximately 40.000,00€.

40 Inverters

The inverters are the “heart” of the PV system. The inverters are used for the transformation of the Direct Current produced by the PV modules to Alternating Current 230/400V depending if these are 2-phase or 3-phase inverters respectively. The inverters usually have high efficiency above 94% and these are either “string inverter” or “central inverters”. For the PV project it is assumed the use of “string inverters” having nominal output of 100KW each which would meet all the necessary technical requirements according to ISO 9001. Each “string inverter” includes insulation and anti – islanding protection in order to meet the requirements for connection to the grid. The cost of the DC- AC string inverters is approximately 35.000, 00€. Electrical Equipment and Cables

Electrical Control Panels for the DC and AC sides of the PV installation, MC4/MC3 connectors, DC and AC cables, grounding system, surge protection and other electrical equipment is needed for the installation and the connection of the PV system with the inverters- pillars - Transformer. The cost of the electrical equipment and cables is approximately 15.000, 00€. Medium Voltage Substation

The main use for transformers is to step-up inverters’ output voltages to higher voltage in order to be able to connect to the grid. These transformers are also used at PV power plants, to step up to high-voltage levels for long-distance transmission to grid. A transformer is an electrical device used to transfer electric power by electromagnetic induction from one ac circuit to another without direct electrical connection between them. The cost of the medium voltage transformer is approximately 28.000, 00€. Fencing

The installation of fence all around the land parcel is estimated at 15.000 €. Alarm System

A complete alarm system for the protection of PV system and infrastructures which would be consisted by infrared beams and cameras. The cost of the alarm system is approximately 5.000, 00€

41 Lodge

A lodge is usually installed in PV parks for the protection of electronic equipment and for monitoring purposes. The estimated cost is 2.000,00 €.

Budget Cost

The indicative budget cost for the purchase and installation of the PV power plant is approximately 300.000, 00€ and it is summarized in the following table. No Description Budget Cost [€] 1 PV Panels 160.000,00 Fixed – angle mounting system 2 40.000,00

Inverters 3 35.000,00

Electrical Equipment and Cables 4 15.000,00

Medium Voltage Substation 5 28.000,00

Fencing 6 15.000,00

Alarm System 7 5.000,00

Lodge 8 2.000,00

Total: 300.000,00 Table 3. 3 Budget Cost for the purchase and installation of the PV system.

Labour

There is no need for labour permanent occupation during the operation of PV system. Energy Benefits

The total electricity production corresponds to the average electricity consumption of approximately 160 typical Greek residents (in case of fix – angle PV system) and 217 residents ( in case of tracking PV system) respectively, given that a typical home in Greece consumes about 5.000 KWh per year.

42 Environmental Benefits

Solar Energy produce little or no emissions during operation but may incure some emissions during manufacture. Solar energy could contrbute to mitigation of climate change. Furthermore, solar energy shows simple scalability in respect of power needs and silicon has availability in the Earth. Time value of money methods

The time value of money methods will be used for the investment’s financial decisions. The basic measures of the methodology is the calculation of Net Present Value (NPV) and Internal Rate of Return (IRR). Taking into account the relevant literature we propose the static NPV approach to be used as methodology due to investment’s characteristics i.e. long-term PV project with estimated initial investment cost and certain returns due to the recent policy as well as to foreseen long – term purchase agreement with Operator of RES & Guarantees of Origin (DAPEEP SA). For the analysis we use techniques for capital budgeting which orientate the potential investor to make a decision over the investment project. We may assume that the stream of cash flows provided by the project is estimated without any error. Net Present Value (NPV)

The Net Present Value (NPV) is a method which is used to determine the present value of all future cash flows generated by a project including initial investment cost. NPV is the difference between the present values of expected cash inflows and outflows. It depends on the discount rate. NPV accounts for the time value of money. The aim is to compare the costs and benefits of the PV project in order to evaluate a long- term investment decision. The NPV formula is the following:

Where

CF0 : cash flows in period 0,

(cost of CF0 is generally negative),

CF1 : cash flows in period 1,

CFn : cash flows in period n and k: discount rate. For the computation of NPV a five step approach is being used:

43 1. Estimation of initial investment cost 2. Forecast cash flows 3. Estimate cost of capital - The cost of capital is the discount rate used to determine the present value of expected cash flows - The riskier a project, the higher its cost of capital 4. NPV computation 5. Decision Making - Accept the project if it has a positive NPV - Reject the project if it has a negative NPV Internal Rate of Return (IRR)

The Internal Rate of Return (IRR) is the discount rate at which the Net Present Value (NPV) equals zero. Mathematically, we solve for the rate of return where the NPV equals zero. Projects with IRR values greater than the opportunity cost of capital could be accepted. The NPV and IRR criteria function in a supplementary way. Discount Rate

The discount rate is an important parameter for the computation of NVP and consequently the IRR. A fair discount rate should reflect to the perceived project’s risk, the loan interest rate, the inflation rate and the investement’s term. The financial managers may use the default values for projects with an “average investment’s risk”. The most commonly used discount rate is the Weighted Average Cost of Capital (WACC) which is computed with the following equation: WACC = wE (rE) + wD i (1-TC) (3.2) Where wE: weight of equity in total market value, rE: cost of equity, wD: weight of debt in total market value, i: cost of debt and Tc: corporate tax rate. If a project has risk above or below average the managers may adjust the WACC upwards or downwards respectively. Taking into account the project’s characteristics we have to decide the discount rate for our estimations. The long-term horizon of the PV project, the low risk of efficiency

44 because of this technology already have been used for many years ago and the relatice legislative framework it would be suggested that the investor could rely highly on the weighted leveraged capital financing. Taking into account all of the above we choose as discount rate for NPV calculation the cost of debt i.e. the interest rate of the long-term bank loan. We took into account the computational effort required of defining the cost of equity because its calculation needs i.e. dividends’ growth, market value of the company’s stock, or equity beta, the market risk premium and the risk-free rate (CAPM). Furthermore, in our computational analysis the interest rate of the long-term bank loan may be considered as the opportunity cost of investment. Depreciation method of fixed assets

The investment’s valuation period is 20 years. The straight line depreciation method is being used for the fixed assets according to national accounting rules. The accounting rules determines 5% - 7% coeffient for the depreciation calculation per year. We choose that the depreciation of the technical equipment of the project will take place in 20 years with depreciation coefficient of 5%. General and Administrative Expenses and Costs of Goods Sold

The annual costs of goods sold (insurance, security and maintenance costs) as well as the general and administrative expenses are estimated 5.604,50€ for the 1st year which correspond about 10% of the estimated revenues. Consumer Price Index (CPI)

We assume that the sale price of generated electricity as defined by the legislative framework shall be adjusted each year at 25% of the CPI of the previous year as it is established by the Bank of Greece. CPI is therefore an important input parameter in order to determine the level of sales prices and therefore the level of revenues of the PV project. A choice has to be made for the CPI since no accurate forecasts exist of the annual average of each year’s CPI for the next 20 years. Focusing on the data given by the Hellenic Statistical Authority, the %CPI of the last 10 years fluctuated as illustrated in the figure 3.4. The % CPI of the last years as well as the existing economic environment indicates that a safe scenario for the next 20 years could be an average of 1,90%. Therefore we may assume that an acceptable level of reference for the revenue’s growth is around 1,90%, which is used to determine the level of electricity sales prices for the next 20 years of the valuation period.

45

Figure 3. 4 The % CPI of Greece from 2010-2019 Source: https://www.statistics.gr/en/statistics/-/publication/DKT87/-

Ratio Analysis

Profitability index

The profitability index PI represents the comparison between the project’s NPV with the capital investment I0. Positive values of this index show a good economic performance of a project. A higher PI indicates more attractive project. The PI is computed by dividing the the present value of future expected cash flows by the initial investement cost in the project. A PI greater than 1 is deemed as a good invetsment. Gross Margin

The gross margin represents the percent of total sales revenue that the company retains after incurring the direct costs associated with producing the goods and services sold by a company. It is calculated by the formula:

The higher the Gross Margin percentage value the more the company retains the amount of money of sales in order to fulfil other financial obligations. Therefore, higher percentages of Gross Margin are positive for the investment company. Operating Margin

The operating margin shows how controllable are the company’s costs. It is a measure of the operating efficiency and company’s pricing strategy It is computed by the formula:

46

A healthy operating margin is required for a company to be able to pay for its fixed costs, such as interest on debt. Payback period

The payback (PB) method computes the amount of time required to recoup the initial investment. A project is acceptable if the payback period is shorter than a certain time. The projects with shorter payback periods are more desirable. The payback (PB) is easy to calculate and understand. The payback is calculated by using the following formula:

The weaknesses of the payback method are the fact that ignores the time value of money and the cash flows occurring after the payback period. Main Assumptions and Parameters

The main assumptions and the parameters used to conclude with the results of the Benchmark Model are the followings: 1. The PV power plant will be installed at land parcel with area at least 10.000 – 11.000 square meters in the municipality of Pirgos in Western Greece. 2. The financial billing mechanism according to current policy is the “sale all the generated electricity to grid” with selling price set to 0,063€/ΚWh. 3. The PV power plant consists by 1750 silicon crystalline PV panels of 285Wp with total installed capacity 498.75 KWp. 4. The use of fixed – angle mounting PVsystem is included. 5. The average performance is estimated 1.602,44 KWh/KWp according to the PVGIS software. 6. The initial investment cost is estimated 300.000,00 €. 7. The total losses are estimated 0.8% per year (worst – case scenario). 8. Long – term up to 10 years Bank loan which would cover up to 70% of total investment cost with 9,5% interest rate. 9. The time valuation period of the investment project is 20 years. 10. A new company will be established for the management of the project.

47 3.5 Analysis of findings

Sensitivity analysis refers to the uncertainty in the output of our Benchmark Model. More specifically it is the procedure of calculating of alternative scenarios in order to determine the impact of a variable under sensitivity analysis. It is very useful for checking the robustness of the results of the model and understanding of the relationships between input and output variables. After investigating the sensitivity of the model to different input parameters the scenario analysis method is further analysis of the results. The worst and best -case scenario indicate the importance of available options for the potential investors.

3.6 Validity and Reliability

According Stake’s approach (1995) to the number of case studies to be conducted, he concludes not to define a finite number. The number rather depends on the research question and its purpose. Eisenhardt (1989), however, suggests conducting more than four cases in order to derive generalizable finings. According to Yin (2014) even one case is enough to generate valid data. Generally, there is a positive correlation between investigated cases and validity. Thus, Yin advises to examine multiple cases (when available) because a multiple-case study can strengthen derived findings and does not lead to a direct replication compared to single-case studies. However, dealing with case study research also requires to consider following issues. Regarding a single-case design, reliability as well as the generalization of the findings is subject of critique. Furthermore, criticism arises because of the deep involvement of the researcher in the study which may affect the results (Yin,2014). Applying the case study method allows to gain a holistic and real-world perspective (Yin,2014). Another advantage is that the case study research can be used retrospectively as well as prospectively. When applying the same theory and application of the same investigative steps, the re- execution of the case study must have the same results. Regarding a single-case design, reliability as well as the generalization of the findings is subject of critique. Furthermore, criticism arises because of the deep involvement of the researcher in the study which may affect the results (Yin,2014).

48 CHAPTER 4: FINDINGS

4.1 Introduction

This chapter includes the financial analysis with presentation of the results of the Benchmark and Alternative Models, discussion of the results and decision making process with the worst and best-case scenario following the implementation of methodology described in previous chapter.

4.2 Basic Assumptions

The following table 4.1 summarizes the Benchmark Model’s basic assumptions and parameters used for the financial analysis. Benchmark model: the basic assumptions

Type crystalline sillicon technology Quantity 1750 PV panels Nominal power (each) 285 Wp Total nominal power 498,75 KWp

Expected Electricity

production

per kWp 1.602,44 KWh

per year 799.263,59 KWh

Total system energy losses 0.8% per year

Total initial investment 300.000,00 Euros

cost

Table 4. 1 BM: Assumptions Loan Terms

Capital Financing of the Investment Project

Equity = 30% Borrowing = 70%

49 Interest rates 9.50%

Loan duration 10 Years

Table 4. 2 BM: LoanTerms Form of the Company

Tax rate = 20% Payable Dividends = 0 Production Process Parameters

The parameters that concern the production process are presented in Table 1 of the Appendix A for the 20 years of the valuation period. No scaled production is predicted and the process starts from the 100% of its potential from the first day of operations. The capacity level in normal function is 799.263,59 KWh per year. However, we should not ignore the fact that system losses should be incorporated (assumption of 0.8% per year); therefore even if the production capacity level starts from 799.263,59 KWh in year 1, it ends up about 686.138,83 KWh in year 20.

Figure 4. 1 Forecast PV System Energy Output (KWh) Sales prices Parameters

Table 5.3: Benchmark Model: Sales prices according to existing Greek legislation (For projects outside auctions, No. ΥΠΕΝ/ΔΑΠΕΕΚ/30971/1190, Government’s Gazette 1045/Β/26.3.2020, ΠΝΠ 30.3.2020, Government’s Gazette 75/Α/30.3.2020 and Law No.4685/2020).

50 PV Investors’ Category Reference Price (€/MWh) From 1/5/2021, the Price will not be Investors for PV Projects <500KWp which depended by auctions and becomes are operating from 1.1.2020 adjustable, with set price 63€/ΜWh Table 4. 3 Reference Price of PV projects <500KWp, source: www.hellapco.gr

4.3 Efficiency of the Benchmark Model

Under the stated assumptions and initial parameters, we get the results over the benchmark model of the investment project:

NPV Analysis

NPV 80.752,05 €

IRR 12%

Simple Payback Method

Payback Period 10,46 (Year) Ratio Analysis Profitability Index 1,27 (PI) Table 4. 4 Benchmark Model Results The Free Cash Flows Statement and results of the Benchmark Model are presented on Table B.1 of the Appendix. The results of the analysis are positive for the company that would realize the investment project. The NPV is positive and IRR equals to 12%. The firm should pose a minimum rate for IRR under which the management should reject the decision to develop the investment project. In our case, the interest rate plays the role of the opportunity cost i.e. 9,50%. We should also mention that the IRR is influenced by the Free Cash Flows after the deduction of the interest expensed. The simple payback method indicates that the management will be able to pay off the initial investment cost after 10,46 years. Even the payback period seems long; we have to take into account the project- specific characteristics the long-term duration of the investment (20 years) with certain efficiency and revenues due to FIT policy. The long period of payback can be explained by the highly leveraged financing scheme and the time needed for the loan settlement.

51 We investigate also the differences in results due to differences in capital financing and borrowing conditions. The implementation of the investment without any loan i.e. 300.000,00€ equity capital has been the resulted as expected to better results. Regarding to the ratio analysis results, the Profitability Index is 1,27 meaning that the investment is profitable according to capital budgeting techniques. Gross margin and operating margin trends could help us to identify the company’s trends in numbers for each year. As mentioned in Chapter 3, Gross Margin shows the percentage of revenue that exceeds a company's costs of goods sold. The higher the Gross Margin percentage value the more the company retains the amount of money of sales in order to fulfill other financial obligations. High percentages of the gross margin are positive for the company that supports the investment plan. The operating margin, as expected, also gives satisfactory results and the low-cost operating model of the investment project contributes in this direction. The level and trend of the operating margin differs if we choose a different depreciation method and should be considered as a complementary measure, although in our case it shows the operational performance of the project. At the moment there aren’t any complete updated reports and forecasts for the future of a PV investment projects in Greece in order to compare the Benchmark’s Model results in the context of the new policy and prices. According to E. Kalfoutzou (2010) the initial investment cost of similar PV power plant with capacity of 500KWp was estimated 1.926.077,00€ in 2010. The selling price was set to 0,40€/ΚWh and the calculations resulted to NPV: 652.130, IRR: 11% and payback period: 8 years. The initial investment cost has been decreased around 83% since 2010 and the selling price has been decreased from 0,40€/ΚWh to 0,063€/ΚWh. The IRR remains at the same level i.e. 11%-12%. The estimated total capital (after 20 years) is much lower than 2010 levels due to selling price cuts. According to A. Giannigeorgi (2013) the initial investment cost of PV power plant with capacity of 100KWp was estimated 155.250,00€ in 2013. The selling price was set to 0,25€/ΚWh and the calculations resulted to NPV: 31.674,00€ and IRR: 9,72%. In order to examine the financial viability of the Benchmark Model the worst-case scenario was considered in terms of interest rate, maintenance and possible replacement of some components. In addition to that, the estimated annual electricity production is an average value comparing with other operating PV systems in the area.

52 The project is financially viable provided that the tax rates will not change, as well as the compensation price of the electricity produced.

4.4 Sensitivity Analysis and Alternatives

Although the Benchmark Model has been proven profitable, we must take into account any differentiation in research, available options, and offers by suppliers and / or initial parameters of financial analysis which could lead into different results. Four alternatives to the reference Benchmark Model could help the investors to compare the results and identify the several decisions have to make according to their preferences for the implementation of the investment plan. 1st alternative: use/no use of 2 – axis solar trackers

The potential investor of a PV power project has another decision to make; the use or no use of trackers regarding to the mounting system of the PV system. As described in section 2.1.5, trackers allow movement of the panels so as to follow the sun during the day ensuring higher efficiency of KWh per KWp. According to the results obtained by the PVGIS software for the location of the project, as described in section 3.3, the use of trackers increase the electricity capacity by approximately 36% (fixed: 799.263,59 kWh per year, tracking 2-axis system: 1.089.232,75 kWh per year). As a matter of fact, the supplier company, from which we collected the offers, guarantees an increase of 30% when compared to fixed-basis systems. On the other hand, we estimated by market search that the use trackers will increase the total initial investment cost by 40.000,00€. It is therefore interesting to investigate the relation of cost and efficiency that results in different levels of IRR. While implementing the sensitivity analysis for the use or no use of trackers, we had to adjust the efficiencies (according to PVGIS software), the investment cost (fixed instead of moving bases) and the depreciated values. Our results are presented in the next figure 4.2. It is evident from the results that the use of trackers increases the IRR of the total project by 8%. It is impressive that for the case of signing the sales contract from May to August 2021, the use of trackers leads to a very efficient project with an IRR of 20% but the corresponding project without the use of trackers is in danger to be rejected, as the IRR 12% is above but close to the opportunity cost of the investment.

53 The striking point of the results is that for lower capacity levels the difference of the two compared projects’ IRRs are bigger than the corresponding difference for higher levels of capacity.

Figure 4. 2 Sensitivity Analysis BM and 1st Alternative Model: use of 2-axis trackers Further analysis of the results showed that the latter can be explained by the relation of the adjusted investment cost and the theoretically proven electricity production for projects with and without the use of trackers; the relative difference is higher for lower levels of capacity. The following figure 4.3 presents the Cumulative Cash Flows for the Benchmark Model and 1st Alternative: use (no) of trackers.

Figure 4. 3 Cumulative Cash Flows for the BM –1st Alternative: use (no) of trackers

54 Therefore we conclude that the use of trackers in a PV power project affects positively its IRR. Finally, if we rely on the empirical results that point at even higher percentages of efficiency than the theoretically suggested (for projects with the use of trackers), we could conclude that the use of trackers should be definitely included in the project. The results for the sensitivity analysis of the 1st alternative model are presented in table B.1 of the Appendix. 2nd alternative: initial investment cost

The choice of the second alternative model was motivated by the evolution of PVs investment cost the last years as already described by section 2.3.2, the mean cost of PV modules decreased significantly the last years due to the elaborated technological learning curve. Economies of scale contributed to the huge reduction of the overall cost of the project. Due to the historic trend and the underlying factors of learning, it is very reasonable to assume that learning and, hence, cost reduction will continue also in the future. The initial investment project cost, as the updated offer that we collected from another supplier company, was reduced by around 17% in July 2020. The highly dynamic market, the market distortions and the existent variety of offers were the reasons why we chose to investigate the differences in the results taking into account different input costs with the help of sensitivity analysis. The table with all the results from the second alternative is Table B.3 of the Appendix. Figure 4.4 shows the results of the evolution of IRR for initial investment cost scenarios. In relation to the initial investment outlay as derived from our research and the benchmark model, we estimated the evolution of IRR for a reasonable range with reference to benchmark model’s initial cost. As it is expected, decrease (increase) of the initial investment cost results to IRR increases (decrease) assumed that all the other defined parameters remain the same. The project is highly sensitive to the input investment cost necessary for its implementation i.e. an investment cost lower approximately with 17% than the cost of the benchmark model leads to an IRR higher by almost 92%.

55

Figure 4. 4 Sensitivity Analysis for the BM - 2nd Alternative: initial investment cost In case of higher initial investment costs resulting to IRRs values below the opportunity cost rate then the management should reject the investment project. The following figure 4.5 shows the Cumulative Cash Flows for the Benchmark Model and the 2nd Alternative: initial investment cost.

Figure 4. 5 Cumulative Cash Flows for the BM –2nd Alternative: initial investment cost 3rd Alternative: Financing Scheme

It is investigated an important financial input parameter of the benchmark model the capital financing scheme of the project for both cases the use of fixed angle mounting PV system and 2-axis trackers. The results of the 3rd alternative model which includes 30% borrowing/70% capital equity, 9, 5% interest rate and 10 years duration, as financial

56 scheme for both cases, are presented in the following figure 4.6 as well as in Tables B.4 and B.5 of the Appendix.We investigated all the potential schemes for the capital financing of the investment project, so as to cover all the potential investors’ budgets. The maximum IRR of the benchmark model under the same borrowing-own equity scheme and the same assumptions is 14% and is succeeded with the use of 2-axis trackers. On the other hand, the minimum IRR is 9% (below the opportunity cost) and is succeeded with the use of fixed – angle mounting system.

Figure 4. 6 Sensitivity Analysis for the BM -3rd Alternative: Financial Scheme. The following figure 4.7 shows the Cumulative Cash Flows for the Benchmark Model and the 3rd Alternative: Financial Scheme for the fixed- angle mounting system.

Figure 4. 7 Cumulative Cash Flows for the BM - 3rd Alternative: Financial Scheme.

57 4th Alternative: FITs Vs Net Metering

As described in section 2.5.1 the medium-voltage self-consumers, legal entities, public or private law, pursuing public or other public interest purposes, general or local, and Energy Communities, would apply to Net – Metering and Virtual Net - Metering billing mechanism as the installed power of each photovoltaic system may amount to up to 100% of the agreed power consumption. In any case, the maximum installed power of a photovoltaic system to be installed cannot exceed the limit of 1 MWp. According to directions given by the authorities the PV power plants with Net – Metering applications are examined with priority. Furthermore, the electricity prices for commercial and industrial medium voltage consumers are presented in the following table 4.5.

Zone Power Energy (€/KW/Month) (€/KWh) 7:00 – 23:00 working days 6,66 during the year

7:00 – 23:00 working days 0,07045

during the year

23:00- 7:00 working days 0,05548

including weekends and national holidays during the

year

Table 4. 5 Electricity Prices for Commercial and Industrial Medium Voltage Consumers, Source: www.dei.gr

The electricity prices for farmers medium voltage consumers are presented in the following table 4.6: Zone Energy (€/KWh) During the year 0,06503

Table 4. 6 Electricity Prices (valid from 01.09.2019) for Farmers Medium Voltage Consumers, Source: www.dei.gr

The medium – voltage consumers (potential investors) with annual energy consumption (KWh) equal or higher than the annual electricity production (KWh) of the Benchmark Model it may be preferable to choose Net – Metering or Virtual Net Metering instead of Feed- In – Tariff billing mechanism depending up on their electricity consumption and

58 load profile. The electricity prices, as shown in the above tables 4.5 and 4.6, are considered higher than the selling price to the grid (0,063€/ΚWh).

4.5 Decision Making

According to the results of the Benchmark Model as well as the sensitivity analysis followed we conclude with the worst and best case scenarios these are presented in the following Table 4.7.

Worst Case Best Case Scenario Scenario Technology Silicon Silicon crystalline crystalline Panels panels Mounting system No Trackers With 2- axis Trackers Electricity 799.263,59 1.089.232,75 produced/year KWh/year KWh/year Investment Cost 300.000,00€ 340.000,00€ Capacity 498,75KWp 498,75KWp Total Losses 0.8% per 0.8% per year year Leverage = 30%/70% 30%/70% Borrowing/Equity Interest Rate (Loan) 9,5% 9,5% Signed after Signed after 01/05/2021 01/05/2021 Sales Contract (Price=0,063 (Price=0,063€/ΚW €/ΚWh) h) NPV -11.038,05 € 384.630,43 €

IRR 9% 14%

Payback Period 8,29 6,81 (Years) Table 4. 7 Worst and Best Case Scenarios

59 Taking into account the fact that the initial investment cost between the Benchmark Model i.e. with fixed – angle mounting system and the 1st alternative model i.e. with the use of 2- axis tracking system could be covered by the increased electricity production of the tracking system as well as the IRR: 14% and the payback period (6,81 years), the worst case scenario is rejected. The four steps for the consumer purchase process according to the consumers’ purchase decision-making theory are the followings: 1. Problem identification 2. Data collection 3. Evaluation of alternatives 4. Final decision There is also evidence of the importance of risk in the investments decisions. The literature provides guidance to policymakers regarding the importance of different types of risk for a given technology. Egli et al. (2018) defined the five Renewable Energy Technology investment risk types most relevant for investment decisions as shown in figure 4.8. This figure also shows the changes in the relative importance of the five risk types between 2009 and 2017. Note that the figure includes risk assessments in which no country or technology was specified, as well as country– and technology–specific assessments.

Figure 4. 8 Relative importance of Renewable Energy Technology risk types

Price risk relates to the price volatility within a policy regime i.e. merchant price under feed-in- premiums policy. Curtailment risk relates to lower revenues due to unexpected

60 curtailment. Resource risk is the risk of lower revenues due to inaccurate resource potential estimation (e.g. solar irradiation or wind speed). Policy risk is defined the risk of lower revenues due to a retroactive change in a RES policy, tax rates and or other policy measures. Technology risk is the risk of lower revenues or higher maintenance costs due to the technology’s novelty and unpredictability i.e. more losses in generated electricity over the years. According to Egli et al. (2018) the technology and policy risks declined the most while price and curtailment risks increased the most and resource risk stayed approximately constant.

61 CHAPTER 5: SUMMARY CONCLUSIONS AND RECOMMENDATIONS

5.1 Summary of the dissertation

The investments in Renewable Energy sector have been increased in the global market over the last years. The Photovoltaic solar electricity potential in Greece and other Mediterranean countries is higher than other European Countries. The Photovoltaic Technology has been improved with higher efficiency PV modules and with better performance. The PV learning curve shows that the price of solar PV modules decreases by about 20% for every doubling in global capacity. According to ITRV 11th edition, the average module price at the end of 2019 was calculated to 0,23USD/Wp. In 2019 the Greek PV Market showed the first signs of recovery. Nowadays in Greek according to legislative framework the available options an investor has are either to sell all the generated electricity to grid or to install self-generating system to cover part or all of own electricity consumption. A long- term energy planning is currently underway in Greece. The preliminary target for cumulative PV capacity till 2030 is set 7.7 GWp. This translates to an average annual market of 450- 500 MWp (2020- 2030). A new support scheme for renewable energy, consistent with the Guidelines on State aid for environmental protection and energy 2014-2020 (and based on competitive tenders and Feed- In- Premiums) was introduced in 2016. The Greek Banks offer the following terms for PV financing long- term loan up to 80% of investment cost with tenor: 10-14 years and Interest rates: Euribor plus 3.5%-4% (including fees). SWOT analysis of the Greek PV Market showed that there are great opportunities for PV investments. The Benchmark Model, which is based on case study research, includes the development of Photovoltaic Power Plant with installed capacity 498,75KWp (<500KWp) in Western Greece Region. The valuation period of the investment is 20 years and the financial billing mechanism that would be used is the “sale all the energy produced to the grid” with sale reference price 0,063€/KWh.

62 The methodology for the investment analysis was based on time value of money concepts and techniques. Net Present Value, Internal Rate of Return, Payback Period calculations and Ratio Analysis were involved to check the robustness of our results. According to findings which discussed in chapter 4, the null hypothesis “A PV project in Greece is financially viable under the current investment environment” is proved true. The project is financially viable provided that the tax rates will not change, as well as the compensation price of the electricity produced. To draw this conclusion, the worst case scenario was considered in terms of interest rate, maintenance and possible replacement of some components. The use of 2-axis solar trackers improve the efficiency of PV systems and it is suggested to potential investors since the increased initial investment cost is covered in 2-3 years. The medium – voltage consumers (potential investors) with annual energy consumption equal or higher than the annual electricity production of the Benchmark Model it may be preferable to choose Net – Metering or Virtual Net Metering instead of Feed- In –Tariffs Mechanism depending up on their electricity consumption and load profile.

5.2 Research contributions

The current research contribution aiming to support potential investors of PV projects to decision making process. The EU Target Model will become effective in Greece. PV projects will have to in the energy participated markets that will operate as of next year, and especially the Balancing Market. When this market becomes operational, corporate PPAs will also become effective, opening new opportunities for PV investors, as the levelized cost of PV projects is already competitive to wholesale prices. Many industrial consumers are looking forward for this new business model. Another market which will be of particular interest after 2020 is the PV plus storage market. There are already many applications for hybrid projects in the non interconnected islands, but there is certainly a need for in front of the meter projects in the mainland as well. The regulatory framework for storage it expected to be finalized in 2020. The long- term energy plan foresees measures for the simplification of authorization procedures. The market proposals include no real need any more for issuing a ‘Production License’ and, consequently, ‘Installation’ and ‘Operation’ permits. The new auction scheme procedures can guarantee any needed controls by competent authorities.

63 Abolishing these unnecessary permits will save time (at least 2 years) and money for investors and will improve effectiveness and productivity of regulatory authorities. The same is true even if one decides not to participate in auctions but rather participate in the wholesale market or sign private PPAs. Streamlined environmental permitting based on existing ‘Standard Environmental Terms’ valid for all PV power stations. A ‘Declaration of Conformity’ to these standards would suffice. This again would save time and money. Land use issues should also be resolved, lifting unnecessary obstacles for PV deployment. Since the end of 2019, the process of simplifying the license procedure has began with the first step being the replacement of the Production License by the Certificate of Electricity Producer.

5.3 Future research and development

Recommendations for future work include the verification of Greek PV Market SWOT matrix with its factors and or Risk Assessment for PV investments through quantitative and qualitative research. In order to identify the SWOT factors and their importance an investigation has to be conducted. Data and opinions would be collected by technical experts, professionals and researchers with knowledge and experience in solar energy field and then it would be analyzed through descriptive statistics in order to evaluate the SWOT factors.

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68 APPENDIX A: Forecasted PV System Electricity Production Table A.1. Annual Energy Output (KWh) YEAR Annual energy output from fix-angle PV system (KWh) 1 799.263,59 2 792.869,48 3 786.526,53 4 780.234,31 5 773.992,44 6 767.800,50 7 761.658,10 8 755.564,83 9 749.520,31 10 743.524,15 11 737.575,96 12 731.675,35 13 725.821,95 14 720.015,37 15 714.255,25 16 708.541,21 17 702.872,88 18 697.249,89 19 691.671,89 20 686.138,52 TOTAL 14.826.772,49

69 APPENDIX B: Free Cash Flows Statement and Results

Table B.1. Free Cash Flows Statement and results of the Benchmark Model

Insurance, Depreciation Operation, Total Interest Loan Cash for the Maintenance, Expenses Profit before Tax Net profit Cumulative YEAR Income (depreciation installment Payments Net Income technical Management (for tax taxes (for tax) (Payments) (tax) Cash Flows for tax office) (Payments) Total Year Total Year equipment Expenses office) (Payments)

1 50.928,63 € 15.000,00 € 19.950,00 € 33.445,89 € 5.604,50 € 40.554,50 € 10.374,13 € 2.074,83 € 8.299,30 € 41.125,22 € 9.803,41 € -80.196,59 €

2 50.761,18 € 15.000,00 € 18.667,89 € 33.445,89 € 5.710,99 € 39.378,88 € 11.382,30 € 2.276,46 € 9.105,84 € 41.433,34 € 9.327,84 € -70.868,75 €

3 50.594,28 € 15.000,00 € 17.263,98 € 33.445,89 € 5.819,49 € 38.083,47 € 12.510,80 € 2.502,16 € 10.008,64 € 41.767,55 € 8.826,73 € -62.042,02 €

4 50.427,92 € 15.000,00 € 15.726,70 € 33.445,89 € 5.930,06 € 36.656,76 € 13.771,16 € 2.754,23 € 11.016,93 € 42.130,19 € 8.297,73 € -53.744,28 €

5 50.262,11 € 15.000,00 € 14.043,38 € 33.445,89 € 6.042,74 € 35.086,11 € 15.176,00 € 3.035,20 € 12.140,80 € 42.523,83 € 7.738,29 € -46.006,00 €

6 50.096,85 € 15.000,00 € 12.200,14 € 33.445,89 € 6.157,55 € 33.357,68 € 16.739,17 € 3.347,83 € 13.391,33 € 42.951,27 € 7.145,58 € -38.860,42 €

7 49.932,13 € 15.000,00 € 10.181,79 € 33.445,89 € 6.274,54 € 31.456,33 € 18.475,80 € 3.695,16 € 14.780,64 € 43.415,59 € 6.516,54 € -32.343,88 €

8 49.767,96 € 15.000,00 € 7.971,70 € 33.445,89 € 6.393,76 € 29.365,46 € 20.402,50 € 4.080,50 € 16.322,00 € 43.920,15 € 5.847,81 € -26.496,07 €

9 49.604,32 € 15.000,00 € 5.551,65 € 33.445,89 € 6.515,24 € 27.066,89 € 22.537,43 € 4.507,49 € 18.029,94 € 44.468,62 € 5.135,70 € -21.360,37 €

10 49.441,22 € 15.000,00 € 2.901,70 € 33.445,89 € 6.639,03 € 24.540,73 € 24.900,49 € 4.980,10 € 19.920,40 € 45.065,02 € 4.376,20 € -16.984,17 €

11 49.278,66 € 15.000,00 € 0,00 € 0,00 € 6.765,17 € 21.765,17 € 27.513,49 € 5.502,70 € 22.010,79 € 12.267,87 € 37.010,79 € 20.026,62 €

12 49.116,63 € 15.000,00 € 0,00 € 0,00 € 6.893,71 € 21.893,71 € 27.222,92 € 5.444,58 € 21.778,34 € 12.338,29 € 36.778,34 € 56.804,96 €

13 48.955,13 € 15.000,00 € 0,00 € 0,00 € 7.024,69 € 22.024,69 € 26.930,45 € 5.386,09 € 21.544,36 € 12.410,78 € 36.544,36 € 93.349,32 €

14 48.794,17 € 15.000,00 € 0,00 € 0,00 € 7.158,16 € 22.158,16 € 26.636,01 € 5.327,20 € 21.308,81 € 12.485,36 € 36.308,81 € 129.658,13 €

70 15 48.633,73 € 15.000,00 € 0,00 € 0,00 € 7.294,16 € 22.294,16 € 26.339,57 € 5.267,91 € 21.071,66 € 12.562,08 € 36.071,66 € 165.729,79 €

16 48.473,83 € 15.000,00 € 0,00 € 0,00 € 7.432,75 € 22.432,75 € 26.041,08 € 5.208,22 € 20.832,86 € 12.640,97 € 35.832,86 € 201.562,65 €

17 48.314,45 € 15.000,00 € 0,00 € 0,00 € 7.573,97 € 22.573,97 € 25.740,47 € 5.148,09 € 20.592,38 € 12.722,07 € 35.592,38 € 237.155,02 €

18 48.155,59 € 15.000,00 € 0,00 € 0,00 € 7.717,88 € 22.717,88 € 25.437,71 € 5.087,54 € 20.350,17 € 12.805,42 € 35.350,17 € 272.505,19 €

19 47.997,25 € 15.000,00 € 0,00 € 0,00 € 7.864,52 € 22.864,52 € 25.132,73 € 5.026,55 € 20.106,19 € 12.891,07 € 35.106,19 € 307.611,37 €

20 47.839,44 € 15.000,00 € 0,00 € 0,00 € 8.013,95 € 23.013,95 € 24.825,49 € 4.965,10 € 19.860,39 € 12.979,04 € 34.860,39 € 342.471,77 €

987.375,48 € 124.458,93 € 134.826,86 € 432.471,78 € 342.471,77 € TOTALS: 300.000,00 € 334.458,90 € 85.617,94 € 554.903,73 €

PV System

Return on Equity (after 20 years) 380,52%

Total Capital (after 20 years) 432.471,80 €

71 Table B.2. Results from Alternative Model 1- Sensitivity Analysis to (no) use of 2 – axis trackers

Insurance, Depreciation Operation, Total Interest Loan Cash for the Maintenance, Expenses Profit before Tax Net profit Cumulative YEAR Income (depreciation installment Payments Net Income technical Management (for tax taxes (for tax) (Payments) (tax) Cash Flows for tax office) (Payments) Total Year Total Year equipment Expenses office) (Payments)

1 64.381,15 € 17.000,00 € 22.610,00 € 37.905,34 € 5.604,50 € 45.214,50 € 19.166,65 € 3.833,33 € 15.333,32 € 47.343,17 € 17.037,98 € -84.962,02 €

2 64.169,47 € 17.000,00 € 21.156,94 € 37.905,34 € 5.710,99 € 43.867,93 € 20.301,54 € 4.060,31 € 16.241,23 € 47.676,64 € 16.492,83 € -68.469,19 €

3 63.958,48 € 17.000,00 € 19.565,84 € 37.905,34 € 5.819,49 € 42.385,34 € 21.573,14 € 4.314,63 € 17.258,51 € 48.039,47 € 15.919,01 € -52.550,18 €

4 63.748,18 € 17.000,00 € 17.823,59 € 37.905,34 € 5.930,06 € 40.753,66 € 22.994,53 € 4.598,91 € 18.395,62 € 48.434,31 € 15.313,87 € -37.236,31 €

5 63.538,58 € 17.000,00 € 15.915,83 € 37.905,34 € 6.042,74 € 38.958,56 € 24.580,02 € 4.916,00 € 19.664,01 € 48.864,08 € 14.674,50 € -22.561,82 €

6 63.329,66 € 17.000,00 € 13.826,82 € 37.905,34 € 6.157,55 € 36.984,37 € 26.345,30 € 5.269,06 € 21.076,24 € 49.331,95 € 13.997,71 € -8.564,10 €

7 63.121,44 € 17.000,00 € 11.539,36 € 37.905,34 € 6.274,54 € 34.813,90 € 28.307,53 € 5.661,51 € 22.646,03 € 49.841,39 € 13.280,04 € 4.715,94 €

8 62.913,89 € 17.000,00 € 9.034,59 € 37.905,34 € 6.393,76 € 32.428,35 € 30.485,54 € 6.097,11 € 24.388,43 € 50.396,21 € 12.517,68 € 17.233,62 €

9 62.707,03 € 17.000,00 € 6.291,87 € 37.905,34 € 6.515,24 € 29.807,11 € 32.899,92 € 6.579,98 € 26.319,94 € 51.000,57 € 11.706,46 € 28.940,09 €

10 62.500,85 € 17.000,00 € 3.288,59 € 37.905,34 € 6.639,03 € 26.927,62 € 35.573,23 € 7.114,65 € 28.458,58 € 51.659,02 € 10.841,83 € 39.781,92 €

11 62.295,35 € 17.000,00 € 0,00 € 0,00 € 6.765,17 € 23.765,17 € 38.530,18 € 7.706,04 € 30.824,14 € 14.471,21 € 47.824,14 € 87.606,06 €

12 62.090,52 € 17.000,00 € 0,00 € 0,00 € 6.893,71 € 23.893,71 € 38.196,81 € 7.639,36 € 30.557,45 € 14.533,07 € 47.557,45 € 135.163,51 €

13 61.886,37 € 17.000,00 € 0,00 € 0,00 € 7.024,69 € 24.024,69 € 37.861,68 € 7.572,34 € 30.289,34 € 14.597,02 € 47.289,34 € 182.452,86 €

14 61.682,89 € 17.000,00 € 0,00 € 0,00 € 7.158,16 € 24.158,16 € 37.524,73 € 7.504,95 € 30.019,78 € 14.663,10 € 47.019,78 € 229.472,64 €

15 61.480,07 € 17.000,00 € 0,00 € 0,00 € 7.294,16 € 24.294,16 € 37.185,91 € 7.437,18 € 29.748,73 € 14.731,34 € 46.748,73 € 276.221,37 €

16 61.277,93 € 17.000,00 € 0,00 € 0,00 € 7.432,75 € 24.432,75 € 36.845,17 € 7.369,03 € 29.476,14 € 14.801,79 € 46.476,14 € 322.697,50 €

17 61.076,44 € 17.000,00 € 0,00 € 0,00 € 7.573,97 € 24.573,97 € 36.502,47 € 7.300,49 € 29.201,98 € 14.874,47 € 46.201,98 € 368.899,48 €

72 18 60.875,62 € 17.000,00 € 0,00 € 0,00 € 7.717,88 € 24.717,88 € 36.157,74 € 7.231,55 € 28.926,20 € 14.949,43 € 45.926,20 € 414.825,68 €

19 60.675,47 € 17.000,00 € 0,00 € 0,00 € 7.864,52 € 24.864,52 € 35.810,95 € 7.162,19 € 28.648,76 € 15.026,71 € 45.648,76 € 460.474,43 €

20 60.475,96 € 17.000,00 € 0,00 € 0,00 € 8.013,95 € 25.013,95 € 35.462,02 € 7.092,40 € 28.369,62 € 15.106,35 € 45.369,62 € 505.844,05 € 1.248.185,35 TOTALS: € 141.053,43 € 134.826,86 € 607.844,05 € 505.844,05 € 340.000,00 € 379.053,40 € 126.461,02 € 640.341,30 €

PV System

Return on Equity (after 20 years) 495,93%

Total Capital (after 20 years) 607.844,05 €

73 Table B.3. Results from Alternative Model 2- Sensitivity Analysis to investment cost

Insurance, Depreciation Operation, Total Interest Loan Cash for the Maintenance, Expenses Profit before Tax Net profit Cumulative YEAR Income (depreciation installment Payments Net Income technical Management (for tax taxes (for tax) (Payments) (tax) Cash Flows for tax office) (Payments) Total Year Total Year equipment Expenses office) (Payments)

1 50.928,63 € 12.500,00 € 16.625,00 € 27.871,58 € 5.604,50 € 34.729,50 € 16.199,13 € 3.239,83 € 12.959,30 € 36.715,90 € 14.212,73 € -60.787,27 €

2 50.761,18 € 12.500,00 € 15.556,58 € 27.871,58 € 5.710,99 € 33.767,56 € 16.993,62 € 3.398,72 € 13.594,89 € 36.981,29 € 13.779,89 € -47.007,38 €

3 50.594,28 € 12.500,00 € 14.386,65 € 27.871,58 € 5.819,49 € 32.706,14 € 17.888,13 € 3.577,63 € 14.310,50 € 37.268,70 € 13.325,58 € -33.681,80 €

4 50.427,92 € 12.500,00 € 13.105,58 € 27.871,58 € 5.930,06 € 31.535,65 € 18.892,27 € 3.778,45 € 15.113,82 € 37.580,10 € 12.847,83 € -20.833,98 €

5 50.262,11 € 12.500,00 € 11.702,81 € 27.871,58 € 6.042,74 € 30.245,55 € 20.016,57 € 4.003,31 € 16.013,25 € 37.917,63 € 12.344,49 € -8.489,49 €

6 50.096,85 € 12.500,00 € 10.166,78 € 27.871,58 € 6.157,55 € 28.824,33 € 21.272,52 € 4.254,50 € 17.018,02 € 38.283,63 € 11.813,22 € 3.323,74 €

7 49.932,13 € 12.500,00 € 8.484,82 € 27.871,58 € 6.274,54 € 27.259,37 € 22.672,77 € 4.534,55 € 18.138,21 € 38.680,67 € 11.251,46 € 14.575,20 €

8 49.767,96 € 12.500,00 € 6.643,08 € 27.871,58 € 6.393,76 € 25.536,84 € 24.231,12 € 4.846,22 € 19.384,89 € 39.111,56 € 10.656,40 € 25.231,60 €

9 49.604,32 € 12.500,00 € 4.626,38 € 27.871,58 € 6.515,24 € 23.641,61 € 25.962,71 € 5.192,54 € 20.770,16 € 39.579,36 € 10.024,96 € 35.256,56 €

10 49.441,22 € 12.500,00 € 2.418,08 € 27.871,58 € 6.639,03 € 21.557,11 € 27.884,11 € 5.576,82 € 22.307,29 € 40.087,43 € 9.353,79 € 44.610,36 €

11 49.278,66 € 12.500,00 € 0,00 € 0,00 € 6.765,17 € 19.265,17 € 30.013,49 € 6.002,70 € 24.010,79 € 12.767,87 € 36.510,79 € 81.121,15 €

12 49.116,63 € 12.500,00 € 0,00 € 0,00 € 6.893,71 € 19.393,71 € 29.722,92 € 5.944,58 € 23.778,34 € 12.838,29 € 36.278,34 € 117.399,48 €

13 48.955,13 € 12.500,00 € 0,00 € 0,00 € 7.024,69 € 19.524,69 € 29.430,45 € 5.886,09 € 23.544,36 € 12.910,78 € 36.044,36 € 153.443,84 €

14 48.794,17 € 12.500,00 € 0,00 € 0,00 € 7.158,16 € 19.658,16 € 29.136,01 € 5.827,20 € 23.308,81 € 12.985,36 € 35.808,81 € 189.252,65 €

15 48.633,73 € 12.500,00 € 0,00 € 0,00 € 7.294,16 € 19.794,16 € 28.839,57 € 5.767,91 € 23.071,66 € 13.062,08 € 35.571,66 € 224.824,31 €

16 48.473,83 € 12.500,00 € 0,00 € 0,00 € 7.432,75 € 19.932,75 € 28.541,08 € 5.708,22 € 22.832,86 € 13.140,97 € 35.332,86 € 260.157,17 €

17 48.314,45 € 12.500,00 € 0,00 € 0,00 € 7.573,97 € 20.073,97 € 28.240,47 € 5.648,09 € 22.592,38 € 13.222,07 € 35.092,38 € 295.249,54 €

74 18 48.155,59 € 12.500,00 € 0,00 € 0,00 € 7.717,88 € 20.217,88 € 27.937,71 € 5.587,54 € 22.350,17 € 13.305,42 € 34.850,17 € 330.099,71 €

19 47.997,25 € 12.500,00 € 0,00 € 0,00 € 7.864,52 € 20.364,52 € 27.632,73 € 5.526,55 € 22.106,19 € 13.391,07 € 34.606,19 € 364.705,90 €

20 47.839,44 € 12.500,00 € 0,00 € 0,00 € 8.013,95 € 20.513,95 € 27.325,49 € 5.465,10 € 21.860,39 € 13.479,04 € 34.360,39 € 399.066,29 €

987.375,48 € 103.715,76 € 134.826,86 € 474.066,30 € 399.066,29 € TOTALS: 250.000,00 € 278.715,80 € 99.766,55 € 513.309,22 €

PV System

Return on Equity (after 20 years) 532,09%

Total Capital (after 20 years) 474.066,30 €

75 Table B.4. Results from Alternative Model 3- Financial Scheme_fixed angle mounting PV system (30% borrowing/ 70% capital equity)

Insurance, Depreciation Operation, Total Interest Loan Cash for the Maintenance, Expenses Profit before Tax Net profit Cumulative YEAR Income (depreciation installment Payments Net Income technical Management (for tax taxes (for tax) (Payments) (tax) Cash Flows for tax office) (Payments) Total Year Total Year equipment Expenses office) (Payments)

1 50.928,63 € 15.000,00 € 8.550,00 € 14.333,95 € 5.604,50 € 29.154,50 € 21.774,13 € 4.354,83 € 17.419,30 € 24.293,28 € 26.635,35 € -183.364,65 €

2 50.761,18 € 15.000,00 € 8.000,52 € 14.333,95 € 5.710,99 € 28.711,51 € 22.049,67 € 4.409,93 € 17.639,73 € 24.454,87 € 26.306,31 € -157.058,34 €

3 50.594,28 € 15.000,00 € 7.398,85 € 14.333,95 € 5.819,49 € 28.218,34 € 22.375,93 € 4.475,19 € 17.900,75 € 24.628,63 € 25.965,64 € -131.092,70 €

4 50.427,92 € 15.000,00 € 6.740,01 € 14.333,95 € 5.930,06 € 27.670,08 € 22.757,84 € 4.551,57 € 18.206,27 € 24.815,59 € 25.612,33 € -105.480,37 €

5 50.262,11 € 15.000,00 € 6.018,59 € 14.333,95 € 6.042,74 € 27.061,33 € 23.200,79 € 4.640,16 € 18.560,63 € 25.016,85 € 25.245,27 € -80.235,10 €

6 50.096,85 € 15.000,00 € 5.228,63 € 14.333,95 € 6.157,55 € 26.386,18 € 23.710,67 € 4.742,13 € 18.968,54 € 25.233,64 € 24.863,22 € -55.371,89 €

7 49.932,13 € 15.000,00 € 4.363,62 € 14.333,95 € 6.274,54 € 25.638,17 € 24.293,97 € 4.858,79 € 19.435,17 € 25.467,29 € 24.464,85 € -30.907,04 €

8 49.767,96 € 15.000,00 € 3.416,44 € 14.333,95 € 6.393,76 € 24.810,20 € 24.957,76 € 4.991,55 € 19.966,21 € 25.719,26 € 24.048,69 € -6.858,35 €

9 49.604,32 € 15.000,00 € 2.379,28 € 14.333,95 € 6.515,24 € 23.894,52 € 25.709,80 € 5.141,96 € 20.567,84 € 25.991,15 € 23.613,17 € 16.754,82 €

10 49.441,22 € 15.000,00 € 1.243,59 € 14.333,95 € 6.639,03 € 22.882,61 € 26.558,61 € 5.311,72 € 21.246,89 € 26.284,70 € 23.156,52 € 39.911,34 €

11 49.278,66 € 15.000,00 € 0,00 € 0,00 € 6.765,17 € 21.765,17 € 27.513,49 € 5.502,70 € 22.010,79 € 12.267,87 € 37.010,79 € 76.922,13 €

12 49.116,63 € 15.000,00 € 0,00 € 0,00 € 6.893,71 € 21.893,71 € 27.222,92 € 5.444,58 € 21.778,34 € 12.338,29 € 36.778,34 € 113.700,47 €

13 48.955,13 € 15.000,00 € 0,00 € 0,00 € 7.024,69 € 22.024,69 € 26.930,45 € 5.386,09 € 21.544,36 € 12.410,78 € 36.544,36 € 150.244,82 €

14 48.794,17 € 15.000,00 € 0,00 € 0,00 € 7.158,16 € 22.158,16 € 26.636,01 € 5.327,20 € 21.308,81 € 12.485,36 € 36.308,81 € 186.553,63 €

15 48.633,73 € 15.000,00 € 0,00 € 0,00 € 7.294,16 € 22.294,16 € 26.339,57 € 5.267,91 € 21.071,66 € 12.562,08 € 36.071,66 € 222.625,29 €

16 48.473,83 € 15.000,00 € 0,00 € 0,00 € 7.432,75 € 22.432,75 € 26.041,08 € 5.208,22 € 20.832,86 € 12.640,97 € 35.832,86 € 258.458,15 €

17 48.314,45 € 15.000,00 € 0,00 € 0,00 € 7.573,97 € 22.573,97 € 25.740,47 € 5.148,09 € 20.592,38 € 12.722,07 € 35.592,38 € 294.050,53 €

76 18 48.155,59 € 15.000,00 € 0,00 € 0,00 € 7.717,88 € 22.717,88 € 25.437,71 € 5.087,54 € 20.350,17 € 12.805,42 € 35.350,17 € 329.400,69 €

19 47.997,25 € 15.000,00 € 0,00 € 0,00 € 7.864,52 € 22.864,52 € 25.132,73 € 5.026,55 € 20.106,19 € 12.891,07 € 35.106,19 € 364.506,88 €

20 47.839,44 € 15.000,00 € 0,00 € 0,00 € 8.013,95 € 23.013,95 € 24.825,49 € 4.965,10 € 19.860,39 € 12.979,04 € 34.860,39 € 399.367,27 €

987.375,48 € 53.339,54 € 134.826,86 € 609.367,30 € 399.367,27 € TOTALS: 300.000,00 € 143.339,54 € 99.841,81 € 378.008,21 €

PV System

Return on Equity (after 20 years) 190,17%

Total Capital (after 20 years) 609.367,30 €

77 Table B.5. Results from Alternative Model 3- Financial Scheme_2-axis tracker PV system (30% borrowing/ 70% capital equity)

Insurance, Depreciation Operation, Total Interest Loan Cash for the Maintenance, Expenses Profit before Tax Net profit Cumulative YEAR Income (depreciation installment Payments Net Income technical Management (for tax taxes (for tax) (Payments) (tax) Cash Flows for tax office) (Payments) Total Year Total Year equipment Expenses office) (Payments)

1 64.381,15 € 17.000,00 € 9.690,00 € 16.245,15 € 5.604,50 € 32.294,50 € 32.086,65 € 6.417,33 € 25.669,32 € 28.266,98 € 36.114,17 € -201.885,83 €

2 64.169,47 € 17.000,00 € 9.067,26 € 16.245,15 € 5.710,99 € 31.778,25 € 32.391,22 € 6.478,24 € 25.912,98 € 28.434,38 € 35.735,09 € -166.150,74 €

3 63.958,48 € 17.000,00 € 8.385,36 € 16.245,15 € 5.819,49 € 31.204,86 € 32.753,62 € 6.550,72 € 26.202,90 € 28.615,37 € 35.343,11 € -130.807,62 €

4 63.748,18 € 17.000,00 € 7.638,68 € 16.245,15 € 5.930,06 € 30.568,75 € 33.179,44 € 6.635,89 € 26.543,55 € 28.811,10 € 34.937,08 € -95.870,54 €

5 63.538,58 € 17.000,00 € 6.821,07 € 16.245,15 € 6.042,74 € 29.863,80 € 33.674,77 € 6.734,95 € 26.939,82 € 29.022,84 € 34.515,74 € -61.354,80 €

6 63.329,66 € 17.000,00 € 5.925,78 € 16.245,15 € 6.157,55 € 29.083,33 € 34.246,34 € 6.849,27 € 27.397,07 € 29.251,96 € 34.077,70 € -27.277,10 €

7 63.121,44 € 17.000,00 € 4.945,44 € 16.245,15 € 6.274,54 € 28.219,98 € 34.901,45 € 6.980,29 € 27.921,16 € 29.499,98 € 33.621,46 € 6.344,36 €

8 62.913,89 € 17.000,00 € 3.871,97 € 16.245,15 € 6.393,76 € 27.265,73 € 35.648,17 € 7.129,63 € 28.518,53 € 29.768,54 € 33.145,35 € 39.489,71 €

9 62.707,03 € 17.000,00 € 2.696,52 € 16.245,15 € 6.515,24 € 26.211,76 € 36.495,28 € 7.299,06 € 29.196,22 € 30.059,44 € 32.647,59 € 72.137,30 €

10 62.500,85 € 17.000,00 € 1.409,40 € 16.245,15 € 6.639,03 € 25.048,42 € 37.452,43 € 7.490,49 € 29.961,94 € 30.374,66 € 32.126,19 € 104.263,49 €

11 62.295,35 € 17.000,00 € 0,00 € 0,00 € 6.765,17 € 23.765,17 € 38.530,18 € 7.706,04 € 30.824,14 € 14.471,21 € 47.824,14 € 152.087,64 €

12 62.090,52 € 17.000,00 € 0,00 € 0,00 € 6.893,71 € 23.893,71 € 38.196,81 € 7.639,36 € 30.557,45 € 14.533,07 € 47.557,45 € 199.645,09 €

13 61.886,37 € 17.000,00 € 0,00 € 0,00 € 7.024,69 € 24.024,69 € 37.861,68 € 7.572,34 € 30.289,34 € 14.597,02 € 47.289,34 € 246.934,43 €

14 61.682,89 € 17.000,00 € 0,00 € 0,00 € 7.158,16 € 24.158,16 € 37.524,73 € 7.504,95 € 30.019,78 € 14.663,10 € 47.019,78 € 293.954,21 €

15 61.480,07 € 17.000,00 € 0,00 € 0,00 € 7.294,16 € 24.294,16 € 37.185,91 € 7.437,18 € 29.748,73 € 14.731,34 € 46.748,73 € 340.702,94 €

16 61.277,93 € 17.000,00 € 0,00 € 0,00 € 7.432,75 € 24.432,75 € 36.845,17 € 7.369,03 € 29.476,14 € 14.801,79 € 46.476,14 € 387.179,08 €

17 61.076,44 € 17.000,00 € 0,00 € 0,00 € 7.573,97 € 24.573,97 € 36.502,47 € 7.300,49 € 29.201,98 € 14.874,47 € 46.201,98 € 433.381,05 €

78 18 60.875,62 € 17.000,00 € 0,00 € 0,00 € 7.717,88 € 24.717,88 € 36.157,74 € 7.231,55 € 28.926,20 € 14.949,43 € 45.926,20 € 479.307,25 €

19 60.675,47 € 17.000,00 € 0,00 € 0,00 € 7.864,52 € 24.864,52 € 35.810,95 € 7.162,19 € 28.648,76 € 15.026,71 € 45.648,76 € 524.956,00 €

20 60.475,96 € 17.000,00 € 0,00 € 0,00 € 8.013,95 € 25.013,95 € 35.462,02 € 7.092,40 € 28.369,62 € 15.106,35 € 45.369,62 € 570.325,62 €

1.248.185,35 € 60.451,48 € 134.826,86 € 808.325,62 € 570.325,62 € TOTALS: 340.000,00 € 162.451,50 € 142.581,40 € 439.859,74 €

PV System

Return on Equity (after 20 years) 239,63%

Total Capital (after 20 years) 808.325,62 €

79

Author’s Statement: I hereby expressly declare that, according to the article 8 of Law 1559/1986, this dissertation is solely the product of my personal work, does not infringe any intellectual property, personality and personal data rights of third parties, does not contain works/contributions from third parties for which the permission of the authors/beneficiaries is required, is not the product of partial or total plagiarism, and that the sources used are limited to the literature references alone and meet the rules of scientific citations.

80