Part of Europe's attempt to keep Greece out of bankruptcy employs an ingenious arbitrage of weather. The plan approved by European leaders on Oct. 27 to restructure the country's huge debt collateralizes a solar-energy project not yet in place. Under Project Helios, photovoltaic plants built with foreign capital in sunny Greece would generate electrical power destined for cloudier markets to the north. The main target is Germany, itself a world leader in renewable energy. The new rescue deal commits Greece to dedicate as much as €15 billion of Project Helios revenue to debt repayment.
Everyone benefits—or so it seems.
Greece gets foreign investment, jobs—those green jobs everyone likes so much—and money for debt service. Germany gets electricity with no carbon footprint. Negotiators get a clever financial arrangement that helped them secure a deal. But there's a problem. It's the same problem that always spoils the renewable energy party. Somebody has to pay the difference between the market price of electricity and the usually higher—in the case of solar, much higher—cost of power generated with fuel from renewable sources.
Greece and Germany, like most European governments, nudge electricity from renewable energy into their power grids with feed-in tariffs. Generators receive above-market prices sufficient to guarantee investment returns; grid operators receive obligations to buy the pricey electricity; and governments or consumers fund the difference. In Greece and Germany, the burden falls on consumers.
Germany's renewable-energy program has been so successful the government is scaling back feed-in tariffs faster than originally planned. Rising electricity prices, despite the increased generation capacity, have become too painful. While the pressure in Germany, is merely political, in Greece it's getting dangerous. Greek citizens frustrated by joblessness, diminishing public services, and rising costs, including of electrical power, are rioting.
The citizens of neither country will much welcome higher rates for electricity. The European rescue deal doesn't address this inconvenience. As always with renewable energy, though, somebody has to pay. And somebody will.
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