GSHP market development in Greece Action Plan - geo.power

GSHP market development in GreeceAction Plancompiled by :Centre for Renewable Energy Sources and Saving – CRES19 th km Marathonos ave., 19009 Pikermi Attikis, Greece1

Submitted to the following Managing Authorities:Green Fund(http://www.prasinotameio.gr/index.php/en/)Operational Programme, Environment and Sustainable Development(http://www.epperaa.gr/en/Pages/Default.aspx)Action PlanCompiled by :Centre for Renewable Energy Sources and Saving – CRES19th km Marathonos ave., 19009 Pikermi Attikis, GreeceDecember 20122

Table of ContentsIntroduction ................................................................................ 4I. Objectives ........................................................................... 9II. Measures ........................................................................... 11Action 1: Financial Incentives ................................................... 11Action 2: Establishment of a national certification scheme forGSHP drillers and installers ........................................ 18Action 3: Communication campaign .......................................... 20Action 4: Reform the legislative framework to simplifybureaucratic procedures and ensure minimumrequirements for GSHP proper operation. .................... 22III. Time Schedule ................................................................... 24IV. Funding resources and financing structure ...................... 25V. Planned results ................................................................. 283

The process of legislation enacting is hindered by the bureaucracy and partly by thecurrent economic situation. Economic policy has been focused in austerity measuresimposed by EU against the economic recession.Taking for granted of all the a.m., the Greek market is not regarded secure and appearsall those characteristics of a new developing market with all the weaknesses andshortcomings. For this reason a lot of attention is paid to the price by consumers and endusers will be called to undertake especially due to continuous deteriorating incomes andprofits.Under this economic environment, the development of GSHP systems should besupported by the state on the principle of the minimum money participation for thecustomers and end-users.The present Action Plan is addressed to the competent Management Authority that willbe in charge of defining investment strategies and managing funds and incentives in order topromote the large scale introduction of GSHP in its own region for the programming period20013-2020. In this context, the document needs to include cost specific measures and aneffective program with a sequence of realistic actions and activities that must be donecorrectly, for a strategy by successful steps leading towards the installation of specific GSHPsnumber to meet the country’s commitments.The country’s target is to meet the EU heating and cooling RES targets ~580 GWh by2020, through the installation of new GSHP systems. This corresponds in an installed GSHPcapacity of 265 MW with a technology mix share of 45% closed, 40% open and 15%horizontal systems.The main goal of the Action Plan is to transfer managerial guidelines, to disclose sometechnical issues, to remove bureaucracy and market constraints, to suggest modifications inthe existing legal framework in order to render a flexible legislative model transferring sometasks to regional level and to provide potential financing schemes for evaluation by theManaging Authority (MA) / Intermediate Body responsible of the EU Structural Fundsmainstreaming programs. By this way, every MA could subsequently shape their politicalendorsement and address call for the concession of grants or negotiating procedures6

etween local authorities and public-private stakeholders for spreading GCHP (GroundCoupled Heat Pumps) within its administrative boundaries.In order to achieve the ambitious targets, intermediate objectives should be set up bymeans of which the MA will persuade the state to apply. A detailed list of the objectives isreferred here below.exchange best practices related to low enthalpy energy supply in the local communitiesand professionals (commercial sector, engineers, drillers)prepare the ground to transfer some of the selected best practices within theMainstreaming Programs of the regions participating into the project by addressingapplications mainly during the current programming period 2013 - 2020 as well as in thefuture regional framework instruments.development of technical guidelines, potential regional legislation and financing schemesthat will be transferred to the Managing Authority / Intermediate Body responsible of theEU Structural Funds mainstreaming programs: according to these tools, every MA couldsubsequently shape their political endorsement and address call for the concession ofgrants or negotiating procedures between local authorities and public-privatestakeholders for spreading GSHP within its administrative boundaries.investigation over the present status and future potential towards reducing greenhousesemissions and primary energy consumption / demand by spreading geothermal energyoption in the regions involved in the project;evaluation of some of the most representatives best practice experienced all over Europeand analyses of their potential contribution/adaptation at local scale in line with EUenvironmental and sustainable energy legislationdevelopment of legislative, technical, economic and marketing initiatives and measures toaddress the introduction and / or spread of the heat pump techniques in the housing &industrial sector within every regional operational planinformation activities and motivations to the technical experts (engineers etc.) and thirdparties (public and authorities) to adapt new technological innovations in the sector ofshallow geothermal energy and the effective use of the high efficient GSHP systems inthe energy saving.7

Thereof, a bandwidth of specific actions should be implemented to support each keyobjective which will assist the future penetration of geothermal energy to the residentialsector via the installation of more GSHP systems.Adoption of a stable and concrete Legislative and Organizational Framework for GSHPpenetrationCreation of a domestic demand of GSHP systems by adoption of incentives for the localGSHP market developmentFinancial incentives during the start-up phaseFiscal deductions or tax credits for both companies and householdsTax releases for commercial companies of GSHP equipmentTechnical support for a strong domestic industry of GSHP systemsCertified installations - Certified drilling technicians & installersInvolvement of dedicated individuals at the early stages of GSHP installations assuccessful storiesSuccess of pioneers and the avoiding of bad examples in the installation of the firstsystems, is the key point for motivating other end-users and companiesMeetings, seminars and educational sessions organised for stakeholders and technicaland commercial and industrial chambers.Conferences and exhibitions organised under MA aegis to get closer the potentialcustomers with the commercial companies and the technical world.Dissemination & Promotion Campaign via Media (TV, Press, Leaflets, PPC bill papers etc.)The specific actions are valued in detail in the following paragraphs by means of a step bystep analysis of all the impacts of each measure and an analytical time plan.8

I. ObjectivesA financial support mechanism for private investments already established for years wasthe 1st Investment Law 2601/1998 which replaced by the Law 3299/2004 “Incentives forprivate investments for economic development and regional convergence” and itsamendment 3522/2006 expired in February, 2010. All the past Investment Laws provisionsconcerned either capital investment subsidies or tax rebates while it should be stressed thatthe use of heating and cooling systems was only supported by a set of financial instruments.Even now there is no regulatory support scheme (referring to targets or obligations) for theuse of such systems.This action foreseen 40% subsidy of the installation cost for the installation of new GSHPsystems in the building sector (residential, public buildings, tourism and agriculturalgreenhouses). Throughout this action the target is to give priority in 100% subsidy of GHE,HEX, submarine pumps of Greek origin.Figure 1.Estimated contribution of the different RES technologies for heating andcooling to 2020 (source: NREAP)According to the National Renewable Energy Plan (NREAP) for Greece, the expectedenergy produced from renewable sources corresponds to the 2020 target is 4.341 ktoe. In9

order to meet the RES Heat and Cooling target the contribution of different technologies ispresented in Figure 1, which leads to a final share of 20% RES in heating and cooling. Theestimated contribution of RES different technologies for heating and cooling according toNREAP is: Heat Pumps: 15,5% Geothermal: 2,6% Solar thermal: 18,7% Biomass: 63,2%The major increase in this period comes from the enhanced use of heat pump systems,which by 2020 rival the contribution of solar thermal systems, a technology widely used inGreece with substantial local industrial base (Table 1).ktoe 2013 2014 2015 2016 2017 2018 2019 2020RES from Heat Pumps 60 81 127 161 181 199 206 279- of which aerothermal 49 66 104 132 149 163 169 229- of which GSHP 1 6,6 9,9 14,6 20,6 27,9 35,3 42,7 50,0Table 1.Estimation of total contribution (final energy consumption 2 ) expected from HeatPumps technology in Greece to meet the binding 2020 targets and the indicativeinterim trajectory for the shares of energy from heat pumps in heating andcooling 2013 - 2020 (source: NREAP)From the table above, the individual contribution of Ground Source Heat Pumps (GSHPs)that must be installed up to 2020 meets the target of 50 ktoe corresponding to GSHPsinstalled capacity 265 MW (2020) in order to meet the EU target of 20-20-20. The totalcapacity of GSHP systems includes every possible configuration in an allocation figure of45% closed, 40% open and 15% horizontal systems.In order to get to the target of 265 MW of GSHP installed capacity in 2020 from thepresent (2012) capacity of 24,2 MW and 2,3 MW annual sales, we propose to take themeasures presented in the next chapters, and use the EU structural funds for Greece inorder to cover the necessary costs. These measures, which constitute the Geo.Power actionplan.1 calculated based on the Geo.Power action plan presented in this document.2 Direct use and district heat as defined in Article 5(4) of Directive 2009/28/EC.10

II.MeasuresAction 1: Financial IncentivesSub-action 1a): Subsidy of the installation cost of GSHP systems in the buildingsvia NSRF budget (period: 2013 – 2020)This measure will save a cumulative amount of 3283 GWh th of heating & cooling energyuse during the above period. The overall profit for the end users during the above 8 yearperiod, accounts for approximately 200 million € (60% operating cost reduction). The turnkey cost of a typical GSHP installation has been estimated in 1,28 €/MW for closed system,1,14 €/MW for open system and 1,16 €/MW for horizontal system.Thus, the total action cost based on the allocation figure proposed has been estimatedin 320 M€ of which the state subsidy accounts for 40% of the capital cost (128 M€)corresponding to less than 1% of NSRF total budget (14 billion €).The criteria in order a project plan to be eligible are presented here below:Complete pre-feasibility study with analytical budget (cost estimation per action, humanresources cost) including financial and environmental indicators (system performance,energy saving, cost benefits, CO 2 emissions reduction)Detailed engineering study with necessary drawings, construction details and sketchesand any other necessary information.Definition of the equity scheme and participation rate of specific financial resources(private & institute funds, Third Party or Bridge Financing, National Structural Programssuch as NSRF)Definition of other grants or/and donations (e.g. volunteer agreements, commercialdonations etc.) or private fundsOfficial/legal documents, building license and financial guarantees on behalf of the enduser (private customer, entity or joint venture) to proof the ability for the correct workcompletionCombination with other energy saving measures11

Sub-action 1b): 100% interest rate subsidy and bank recapitalization plus 100%tax rebates for the remaining amountThe remaining amount of 192 M€ (= 320 M€ − 128 M€) will be covered by low ratedcredit loans with 100% interest rate subsidy in a range of 4 years coupled to bankrecapitalization in terms of warranties. The total amount should be required for this measureaccounts for 38,4 M€ considering a lower interest rate at 7,7%, compared to the current ratevalues of the Greek market (~ 9,5% - 10%).LOAN AMOUNT 192.133,97Duration (years) 4Interest Rate 7,7%Grace period -Annual installment rate 0,30192Table 2a. Loan TermsThe loan service will follow the fixed annuity (debt installment).YearRemaining unpaidamountAnnualinstalmentcapitalBank InterestAnnualinstalmentdebt0 (192.133.973 €)1 192.133.973 € 42.281.707 € 14.813.529 € 57.635.236 €2 149.312.266 € 46.123.260 € 11.511.976 € 57.635.236 €3 103.189.006 € 49.679.363 € 7.955.872 € 57.635.236 €4 53.509.642 € 53.509.642 € 4.125.593 € 57.635.236 €Sum 0,00 € 192.133.973 € 38.406.971 € 230.540.943 €Table 2b. Loan serviceFurthermore, by a 100% tax rebates (assuming an average tax rate of 30%), theamount of 57.5 M€ could be deducted by the annual taxable incomes of beneficiaries (endusersand companies).In this respect, the economic stability, the robust credit institutes, the decreasinginterest rates, the attractive new ‘green’ programs with emphasis to the GSHP systems shallhave to be combined with a political decision of market evolution by means of creating a12

new solid investment framework which will give incentives for both consumers andcompanies, withdrawing the uncertainties and the risk and providing qualitative decisionmaking support services.In the forefront of any political decision should be the implementing of clear-cut andstrict criteria for the potential eligible beneficiaries (entities, end users etc.) to get access tothe banking financing. Bank recapitalization in terms of State guarantees may be provided ifnecessary, in order to ensure the smooth program implementation. It is self-evident; thisprocedure will be associated with continuous follow up of the projects progress in relation tothe money absorbency.The expected net average profit for a household will amount to 1393 € per year takinginto account the annual cost saving by use of GSHPs and the debt service (cost saving –debt service).Overall costs of this sub action, namely the 38,4 million euro loans interest and the 57,5million euro tax reduction will be covered by the EU structural funds for Greece.13

Sub-action 1c): Subsidized electricity tariff for GSHPThis measure provides a subsidized electricity tariff for GSHP by 3 c€/kWh e , by which,projected on the total energy saving (1107,2 GWh e ) over the implementation period 2013 –2020, will bring a total benefit to the consumers on an average of 33,2 M€.By this action the expected positive impacts for the GSHPs market apart from theeconomic benefits for the customers are summarized below: Increasing the interest of domestic customers as a result of significant electricitysupply cost reduction Opening the GSHPs market in more commercial companies to supply equipment ofhigh efficiency and consequently assisting the economic development and striving theunemployment explosionThis action will have an economic impact to the Public Power Corporation, 33,2 M€ and thisamount is also proposed to be covered from mainstream structural funds.14

Sub-action 1d): Job creation potential – Subsidy of labour costAn important opportunity for the market penetration of GSHP systems is the increase oflabour pool particularly under the current economic conditions. The further development ofGSHP market will be accompanied by a significant opening of new jobs as well as theestablishment of new business and retailing companies. As there have been someinstallations of GSHP systems, this already shows an emerging interest from differentmarkets on new technologies, especially those of using renewable energies and it could bean essential opportunity for the reinforcement of the labour market.Job creation potential is more profound in the case of applications in the tertiary sector(domestic, public and tourist), due to the potential size of these market segments. Theavailability of labour pool will enhance/strengthen further the development of manufacturingcompanies in all the relevant fields of the production procedure, from system engineeringdesign to marketing and installation as long as a successful actuation is achieved by properdevelopment measures.The subsidy of labour cost for a specific period (e.g. 6 years), in parallel application ofadditional measures as referred above for the market deploying, would attract companies torecruit high qualified human staff (engineers, technicians, drillers etc.). On the other hand asignificant manpower will access and working opportunities in a developing sector and thestate will effectively fight the unemployment as well.The target value of the labour cost subsidy is 50% for a 6-years implementation period(2013 – 2018). This results to a budget 46,4 M€ that shall have to be directed to this subactioncorresponding to a new GSHP systems installation capacity 162,9 MW.A set of practical steps are recommended as necessary to apply this measure.Creation of certified professionals’ registry. This can be achieved under MA surveillanceassigned to competent authorities (e.g. Technical and Professional Chambers, the Officefor Employment) to call the professionals (installation companies, engineers, drillers,technicians etc.) to participate in this registry.Dynamic registry update with recent information and link to professionals’ profile inorder each concerned person to be able to find useful information such as professionalexperience, number of constructed projects, activity fields etc.15

Assisting the MA by the regional authorities in expertise personnel discovery. A dynamicarchive of experts with updated information (CVs, specialties etc.) comforting the MAand the central authorities in reviewing the registry with new entries which broaden theprofessionals’ pool.Determine the eligibility criteria should be followed by a company in order to be awareof the whole selection procedure. Announce the registration criteria in the stakeholdersvia group of engineers, chambers, press & media.As regards the eligibility criteria, a candidate entity has to accomplish a basic spectrum ofterms and conditions that concerns the financial solvency:Criterion of de minimis for SMEsReliability & experienceGuarantee and commitmentsMedium-term development plans (e.g. for the next 5 years) by exposing the businessgoalsEconomic stability provided by past economic balance-sheets and shareholders' fiscaldeclarations etc.A board of evaluators and inspectors will follow up and guarantee the right observance ofprocedure and the criteria fulfilment for the eligible entities.In the timeframe of sub-action shall have to be included information regarding theinteractions with the public authorities (meetings etc.), analytical cost estimation of this subactionand expected benefits during the implementation period (8 years) on the basis ofestablished indicators (i.e. rate of recruiting, unemployment index etc.).16

Sub-Action 1e): VAT return to GSHP installersThe total cost of installed GSHP capacity (265 MW by 2020) corresponds to 320,2 M€. Inorder to decrease the equipment cost and to emerge the GSHPs market, a 50% VAT returnto installers or/and 50% discount on VAT of commercial companies attributed to the taxauthorities is considered a positive (direct) measure for the SMEs and (indirect) for the endusersas an occasion to access the cheaper equipment and services. This action will have aneconomic impact to the tax authorities, 36,8 M€ and the recommendation is this amount tobe covered by the EU structural funds for Greece.This action is addressed to private end users, hotel owners, public & municipal buildings’operators, SME enterprises providing energy efficiency solutions, commercial companies ofGSHP systems, engineers, drillers etc.17

Action 2:Establishment of a national certification scheme for GSHP drillersand installersIn Greece there is a lack of labelling schemes, standards, procedures and technicalguidelines for the shallow geothermal energy (SGE) exploitation which are in the areaalready established in the EU. There is also a lack of rules and regulations for the design,construction, control, and assembly/installation of equipment that uses SGE and an absenceof accredited laboratories certificate GSHP installations.This lack of certification scheme represents a barrier to the uptake GSHPs within Greecesince the complexity of GSHPs systems and their high cost means customers are reluctant tomake the required financial commitment without the reassurance that a certified installerand driller should bring. Under these conditions, certified professionals will play key role insuccessful external evidence. For this reason, a national certification scheme is regardedimportant to withdraw the barriers related to the customer’s confidence to the professionalsand contribute to the local GSHPs market development. The aim of a national certificationscheme establishment by adopting clearly defined rules is to upgrade the services ofprofessionals. The involvement of experienced and high qualified personnel and pioneers isof utmost interest in the successful installation of high efficient systems in the GSHPs marketevolution and in the attraction of new candidate customers as well.In developing a certification scheme, the first step is the review of current GSHPsinstaller and driller certification schemes in other countries. This review will reveal the needto establish an effective and useful certification scheme and above all, to define the specificrequirements and eligibility criteria to be fulfilled by installers / drillers to access thecertification. The final step is the creation of a certified installers and drillers’ registry. In thiscontext, the Managing Authority (MA) and the local managing bodies will have to performspecific assignments regarding the GSHP installers / drillers’ certification such as:To involve private accreditation bodies and local technical chambers in thecertification procedure. Confirm the competence to carry out certification tasks andtraining courses for the candidates, new installers and drillers.To define in collaboration with technical bodies, the requirements for a GSHP installerand driller certification scheme including the content of the training courses andseminars leading to certification (applicable regulations and directives, installationand maintenance requirements etc.).18

To provide the main standards of an effective exam system for the new installers/drillers and to involve the local technical chambers in conducting periodic examsTo certify qualified installers and drillers, they must provide a technical dossier forassessment (past experience in drilling, installation, projects list, certificates,diplomas etc.)To establish the board of evaluators composed by qualified and experiencedpersonnel with significant awareness of the local GSHPs market to conduct thecandidates’ evaluation.For all individual actions, the total amount required is estimated in 40.000 € per year.This means a funding of 0,3 M€ up to 2020. 50% of this budget (20.000 €) is addressed fororganizing training courses with a provision of GSHP installation study on behalf ofparticipant as mandatory to get the certification. Again these amounts are to be covered bythe EU structural funds for Greece.19

Action 3: Communication campaignThe national communication strategy is essential to promote the benefits of GSHPs on atargeted local and regional level. The GSHP communication strategy has been planned basedon the Local Communication Plan (LCP) that is an integral part of the Action Plan and aims toensure that GSHPs benefits and the related support actions are well communicated at locallevel, effectively managed and responded to the information needs of the public incorrespondence with the information and publicity requirements. The aim of this action is:to ensure the adequate promotion of GSHPs as the best systems for buildings heatingand cooling,to conduct large scale campaigns of sustainable introduction of GSHPs in localheating & cooling market promoting GSHP strengths to key stakeholders (end-users,installers, engineers etc.)to make familiar to the public the potential financing tools and the tax deductionsmaking the GSHP installations attractive.to raise the awareness of the public communicating the benefits of GSHP systemsto expose the results of the best case GSHP installations as pioneering systems forheating and cooling and electricity saving in the buildingsTechnical workshops, involving interested parties, are also important for: familiarizing the engineers and professionals in using GCHP systems forheating/cooling demands of the buildings briefing and motivating consumer unions and syndicates and strengthen theconfidence of people in benefits of GCHPs. facilitating exchange of know-how between operators, experts and stakeholders actuating experienced regions to get exposed in new ideas and practical solutions inthe geothermal energy field. revising the legal framework, improving the investment environment and raising theinvestors’ confidence.Furthermore, seminars and conferences will be organized to bring together stakeholdersand people in order to exchange information, experiences and ideas concerning the GSHPsimplementation, to facilitate an efficient communication at local level for the supportmeasures, funding/granting programs and permitting procedures to share mutual“information platform” and communication tools and to avoid misunderstandings.20

Advertisements in press (e.g. newspapers and technical magazines) and print-out materialare some of the most important key points to broaden GSHP market. For example posterscontaining basic information about GSHP technology, brochures and leaflets with technicaland economic data and other interesting information such as benefits for the environmentetc., have to be produced.Apart from the aforementioned promotion (technical workshops, conferences, pressreleases, newsletters etc.), the publicity has to be launched through,demonstration activities of the best-practice projects through on site visits.a webpage creation supporting also a forum with any kind of information regardingthe existing commercial and installation companies,The presentation of new best practices on GSHP technology, the technical news and theGSHP systems evaluation must be included in the webpage and be updated in daily basis.This point is regarded of primary importance in enhancing the GSHPs disseminationactivities.A profound knowledge of the topic dictates the concession of an annual conference atleast together with conducting of a specific number of seminars and technical workshops.The resources for all these activities are not expected to exceed the 0,2 M€. The webpagecreation and O & M is budgeted at 0.05 M€ while an additional amount of 0,25 M€ is neededfor use in promotional activities and organisation of site visits, making a total of 0,5 M€ to becovered by EU structural funds for Greece.Significant information will have to be provided to the local Managing Authority of theEU Structural Fund in order to open public awareness. Additional promotional actions willalso take place in order to spread GSHP technology and applications to all types of marketactors. To reach this goal, each intermediate and/or managing local body must assign acommunication expert for this task.The communication campaign is addressed in various target groups and levels. In thelocal level this can include domestic customers & individuals, regional development councilsand/or agencies, municipality personnel and local governors, institutions, chamber ofcommerce and industry, public & municipal buildings (schools, offices etc.), commercialsector, chamber of engineers, industries etc. In the national level, the communicationcampaign could be addressed in every ministry, national chambers, national authorities andagencies.21

Action 4:Reform the legislative framework to simplify bureaucratic proceduresand ensure minimum requirements for GSHP proper operation.Action 3 refers to the fostering of ongoing reforms in the field of GSHP systems. Aim ofthis Action Plan is to raise the capacity and to capitalize the knowledge obtained byGeo.Power project and positively influences the policy and process to increase theapplication of GCHP in the local level.In the last years, the aim of the Greek state was to promote the independent powerproduction with simultaneous emerging the indigenous RES exploitation and co-generation.Actually, the current legal framework incorporates the new trends of RES-Electricity (RES-E)market but at the same time contains significant omissions regarding the RES-Heating (RES-H) market. The main regulations and schemes concern more the RES-E market (Law2244/1994, law 2773/1999 for the electricity market liberalisation, law 3468/2006, law3734/2009 and law 3851/2010 for the acceleration of RES development and other measuresto cope with the climate change), rather than RES-H market. Regarding the heating andcooling energy, no FiT (Feed-in Tariff) provision referring to the private sector is made in theenacted law 3851/2010 for RES investments. On the contrary, this is provided for theelectricity production from RES-E systems. In addition the new Investment Law 3908/2011 ismore oriented to the new trends of RES market led by electricity production. However, thislaw combines a bundle of financial incentives such as tax releases on the pre-taxed profits (6years for existing enterprises and 8 years for new enterprises), selected capital investmentsubsidies under established terms and conditions and subsidies in leasing depending on thedevelopment target of each enterpriseThe legal framework for geothermal energy requires a revision with additionalregulations for accelerating the geothermal energy use and for the most effective reductionof the heavy bureaucracy. Currently, an amendment process of the basic geothermal Law(3175/2003, “Recovery the geothermal potential, district heating and other provisions") isbeing under consultation by replacing specific articles as well as the establishment of anadditional state enactment oriented to SGE use (being as final draft so far), which refers tothe own use of heating and cooling applications for exploitation the shallow geothermalenergy fields (i.e. groundwater and surface water that are not characterized as geothermalpotential). In the current law amendment, a detailed reference to various aspects of the lawis made concerning the procedure for granting an authorization (required supporting,22

estrictive, holders, etc.) of a GSHP system with the aim of providing heating and/or coolingand/or using hot domestic water. In the Law 3734/2009 “Co-generation of heat andelectricity” and in the MD D9B, d/F166/oik.13068/GDFP 2488/2009 “Installation licenses forthe own use of heating-cooling energy systems through exploitation of spaces of geologicalformations and waters, surface waters and ground waters, which is not characterizedgeothermal potential” no reference is made in open geothermal systems with free pumpingby the sea, river or lake. The current permission procedure is not clear introducing a lot ofconstraints for the house owners as it requires a special ministerial decision for any actionrelated to free pumping.Therefore, the following initiatives for the reformation of the regulatory framework areregarded necessary. Simplification of permission procedure for the closed loop systems anddecentralisation in regional level. Submission of one single application and implementation of one stop shop procedureparticularly for the small domestic systems. Establishment of a distinct permission procedure for the open geothermal systemswith clear and comprehensible steps for the householders and the companies. Within the framework of the current Law 3851/2010, PPAs for RES-H units must alsobe contracted between the Operator of Electricity Market and Producer after abilateral agreement for 20 years (10 plus 10, provided that the relevant generationlicense obtained). Additional granting 5% supplied by the new Investment Law 3908/2011 in case ofusing geothermal heat pumps. Streamlining and simplifying the MD D9D,Β/F166/oik.18513/GDFP 3512 “Conditionsand hiring procedure of the public rights to explore and manage the geothermalpotential and the overall management of geothermal fields in the country”.23

III.Time ScheduleIn the time frame of each action shall have to be included information regarding thedetection of the GSHP best case applications, specific communication and invitation activitieswith stakeholders (institutes, professionals and experts) to contribute to the programrealisation.As a general guideline for the MA’s is the timeframe to provide milestones for thefollowing items at least.Administrative decisions and programme building: 1 st sem. of 2013Call for interest, bidding procedure etc.: 2 nd sem. of 2013Implementation and follow up of the program targets: 2014 – 202024

IV.Funding resources and financing structureAll the above mentioned proposed actions are summarizing in a decision making matrix(see table below) and constitute a useful tool for the state authorities and the MA to exert aneffective development policy and to apply the proper measures for emerging further theGSHP market.Each sub-action is associated with an analytical cost budgeting and funding scheme forsuccessful implementation of all the required measures.RES HeatHeating &Yeardelivered(ktoe) (GWh th )GSHP(MW th )cooling(GWh h+c )CO 2(Tn)2013 6,6 76,4 34,8 101,7 19.8632014 9,9 115,2 52,5 153,3 29.9542015 14,6 169,6 77,3 225,7 44.0892016 20,6 239,5 109,2 318,7 62.2692017 27,9 325,0 148,1 432,5 84.4942018 35,3 410,5 187,1 546,2 106.7192019 42,7 495,9 226,0 660,0 128.9432020 50,0 581,4 265,0 773,7 151.168Total 207,6 2.413, 5 3.282,6 627.499Table 3. Evolution of GSHP systems. Energy saving & environmental benefits over theperiod 2013 – 2020.As shown in table 4, the overall subsidized amount is 341,2 M€. The funding resourcesfor all the actions will be requested by non-disposed NSRF budget, corresponding to 2,4% ofthe NSRF total budget (14 B€).To support these actions, an analytical plan has to be undertaken by MA in order toapply this policy with the right way (i.e. implementation of an effective allocation scheme ofthe saving funds from the natural gas taxation to each action and sub-action).Assigning qualified personnel to prepare a detailed business plan per task in associationwith an installation cost analysis for the expected number of GSHP systems to beinstalled per year over the period 2013 - 2020.25

Determining the priority fields for financing (electricity tariff subsidy, subsidyemployment cost, promotional and R & D activities etc.)Elaborating a feasibility study for all the planned actions (making reference in the costestimation and the expected results)Establishing an informative e-platform with high knowledge transferability and preparingthe required material with care and with participation of professionals and stakeholders.MeasureTotalSubsidizedFunding StructureCostamount(M-€)(M-€)Subsidy of Capital Cost (40%) 320,2 128,1 by NSRF total budgetInterest Rate subsidy (100%) forgranting of 4-year banking loans 192,138,4 by NSRF total budgetTax rebates (coefficient: 30%) 57,5 by NSRF total budgetElectricity Tariff subsidy(3c€/kWh)Subsidized employment cost for 3years (50%)1107,2 33,2 by NSRF total budget93,0 46,4 by NSRF total budgetVAT return to installers (50%) 73,7 36,8 by NSRF total budgetCertification of Drillers/Installers 0,3 0,3 by NSRF total budgetCommunication campaign forGSHPs0,5 0,5 by NSRF total budgetLegal framework reform 0,1 0,1 by NSRF total budgetSum 341,2Table 4. Cost breakdown, subsidies and funding schemes.Alternative funding recourse could be the direct grants from the natural gas at a rate of1% of the sales. The net profits of the Hellenic Gas Transmission Operator (DESFA) from thesales present constant and continuous rising. According to results released by DESFA, thenet profit amounted to 45,3 million € in the first semester of 2012 increased byapproximately 12.3% over the corresponding period of 2011. At the same time from theeconomic balance sheets of the company the sales for the year 2011 was 264.8 million €increased by 150% compared to year 2010. Based on these data and taking into accountconservative scenarios, in spite of the favorable conditions in the natural gas market, aprojection of estimated sales was performed over the period 2013 – 2020 considering a 10%increasing rate. According to this scenario the enterprise’s total sales over this period (726

years) is approximately calculated in 2.763 M€. Part of this amount approximately 193,4 M€(1% on the gas sales) might be contributed as an auxiliary funding resource to the aboveestimated funds (341,4 M€) covering various actions (GSHPs installations, dissemination andR & D activities etc.). But more important is the fact that this financing source will continueto provide a long term stable cash flow, even after the end of the EU framework supportprogram from Greece.Significant role shall play the credit coverage of the loan interest rate and the economicrobustness of enterprises and credit institutes resulting from fiscal and other supportingmeasures. To this direction, the Special Support Fund (SSF) could also play key role inSGE/GSHP market supplying direct guarantee of liquidity by issuing favourable and low ratedloans for the enterprises that will invest. The Special Support Fund (- ETEAN- formerGuarantee Fund for Small and Very Small Enterprises) constitute an alternative supportingmechanism for the SMEs and the innovative enterprises as well.27

V. Planned resultsThe Action Plan was developed for providing legal/regulatory, economic and technical &best-technological proposals that – through the inclusion into the regional operationprograms, address long-term investments strategy for GSHP applications at wide scale.Intermediate and/or managing bodies responsible for the action plan implementationshould be the banks for the direct subsidies and subsidized 4 year loan financing, the PublicPower Corporation of Greece for the low electricity tariff, the manpower employmentorganization (OAED) for the subsidized employment, the Ministry of finance for the taxexemptions and VAT returns and a state controlled organization together with installers andprofessional associations for the certification scheme and the communication campaign.The implementation of the action plan should result in gradual increase of GSHPs newinstallations in Greece from the present figure of 2,3 MW annually to the value of 39 MW peryear during 2017, which will continue until the year 2020, as shown in Figure 2.265 MW (th)24,2 MW (th)2,3 MW 50 ktoe(th)39 MW (th)Figure 2. Market development of GSHPs in Greece as a result of the Geo.Power actionplan, in terms of annual added capacity, annual ktoe renewable energycontribution and cumulative installed capacity during the years 2012 (present) to2020 (target year).28