The reason for this publication was the main article of Tharros of 27/10/2010 entitled “Risk the Cultivation of Photovoltaics”. This article also states that “At the urging of the Ministry of PASEGES and Associations, farmers pay for studies without knowing if their application will be accepted.”
I think the above article is an opportunity to clarify some things that concern the interested public.
The beginnings of this story are found in the farmers themselves who through PASEGES pressured the political leadership to give them the opportunity to install photovoltaic systems. This possibility was given through the new law 3851 of 4/6/2010. In fact, the decision of the Ministry of Environment on the distribution of power for photovoltaics, was particularly generous to farmers, giving them the opportunity to install by 2020 a total of 750 MW of photovoltaic or otherwise by 2020 34% of photovoltaic power to be installed in Greece will belong to farmers!
So the question that arises is why PASEGES was pushing in this direction. Obviously both PASEGES and the political leadership are looking for something to replace the agricultural income which will be reduced due to the cessation of subsidies.
So what happened is that farmers were given an opportunity to invest in photovoltaic parks. The same thing happens when the Ministry announces programs for the creation of agro-tourist units or units for the standardization of agricultural products. And in this case it gives farmers an opportunity to invest without forcing anyone to do so.
It should be made clear that the installation of a photovoltaic park, whether done by a farmer or by any individual or company, is always an investment. And like all investments, it involves both profit and risk. This is what we must always keep in mind.
Of course, in this case, above all, we are talking about an investment that helps significantly and actively in protecting the environment and consequently in improving our quality of life.
In general, we must always weigh the risks and the expected benefits, so a business plan is necessary which will lead us to the final decision on whether it is worth investing or not. Whether or not you will need to borrow as part of your business plan depends on how much money you can raise from equity. Borrowing is not necessarily bad. We resort to borrowing either to build a house or to make any other investment. What we always have to consider in the context of the business plan is whether we will be able to repay the loan.
And of course the final decision is the responsibility of the prospective investor. The individual responsibility of each of us is always present in all our actions, regardless of whether someone urged us or not. The adventure of the stock market I think is indicative.
As to whether the farmers’ applications will be accepted, despite the money they may have spent, I am of the opinion that the same applies to any investment. And this is part of the necessary risk that one takes when one wants to invest. For example, when we make an application for financing the creation of a unit for the standardization of agricultural products, we will again spend some money on studies and the preparation of the file, and here again our application may not be approved.
Finally, the above article states that the price of the kilowatt hour at which electricity will be sold to PPC will be reduced. First of all, the electricity is not sold to PPC, but to DESMIE. Secondly, the price “locks” the moment someone signs a contract and this price will be valid for the 20 years of the contract. In fact, the price will increase every year to 25% of annual inflation. What exists is an escalation of the price of the produced kilowatt hour, depending on when the contract is signed. If the contract is signed by February 2011 the price that will be locked will be 44.1 cents per kilowatt hour produced. Whoever signs from February 2011 to August 2011 the price that will be locked will be 41.94 cents per kilowatt hour produced, etc. All this is provided by article 27A of law 3734 of 2009 as revised by law 3851 of 2010.
In conclusion, the main question is whether it is worth the investment in a photovoltaic park.
The answer to this question is neither unambiguous nor general. It concerns each investor individually and his ability to make the investment. There are many parameters in this equation that need to be considered by the prospective investor.
The detailed analysis of a relevant business plan is beyond the scope of this article. What we can say in general is that investing in a photovoltaic park is currently one of the safest and most profitable investments. It is safe because:
- It has behind it a contract with a specific price and duration of 20 years and with as clear terms as possible.
- Revenue can be provided with great security for the entire duration of the contract
On the other hand, it is profitable because the rate of return of such an investment is high (ranging around 20% to 25%, depending on the money it has from equity) and has a relatively short payback period (about 5 to 6 years).
The answer to the question whether he will make such an investment or not should be given by each one individually and the decision will be borne by him alone.
Published by Kostas Mourtzanos in the newspaper Tharros