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Returns on investment in electricity producing photovoltaic systems under de-escalating feed-in tariffs: The case of Greece

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  • Danchev, Svetoslav
  • Maniatis, George
  • Tsakanikas, Aggelos

Abstract

Under the threat of ballooning energy bills, the Greek legal framework supporting the electricity producing photovoltaic systems (PVS) changed in January 2009 from a fixed to a de-escalating feed-in tariff schedule. In this paper we investigate the internal rate of return (IRR) on investing in PVS under the new regulatory environment. We find that the new scheme favours strongly the early entry in the market. Unless there is a significant decrease in the equipment cost over the next decade, entering the market from 2015 onwards will be prohibitive. The bias of the current policy design towards early entry in a rapidly developing set of technologies entails the risk of a lock-up with sub-optimal technological option. This outlines the importance for policy design of linking the rate of feed-in-tariff de-escalation to more realistic expectations regarding the technology learning curve.

Suggested Citation

  • Danchev, Svetoslav & Maniatis, George & Tsakanikas, Aggelos, 2010. "Returns on investment in electricity producing photovoltaic systems under de-escalating feed-in tariffs: The case of Greece," Renewable and Sustainable Energy Reviews, Elsevier, vol. 14(1), pages 500-505, January.
    • Handle: RePEc:eee:rensus:v:14:y:2010:i:1:p:500-505
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