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Memorandum of Understanding on Specific Economic Policy Conditionality6.1.3. Providing for a financially sustainable development of renewable energysourcesThe Authorities commit to design and implement a comprehensive reform of renewable energypolicies, with the support and in close cooperation with the technical assistance provided by theEuropean Union, also taking into account proposals in Ministry's “Plan to Reform the Sector ofRenewable Energy Sources (RES)” and the view of industry, to provide long-term sustainability atzero average deficits.The Authorities monitor the evolution of the Renewable energy sector in order to stimulate itsappropriate development as provided by EU policies and legislation, while ensuring financialsustainability of incentives and security of the network. In this view, the Authorities:1. Once the RES account debt is eliminated, adjust the RES levy every six months asnecessary, so as to keep the account’s 24-months ahead flow projections in balance andwithout debt (continuous).2062. Ensure that LAGIE, RAE, and the Ministry of Energy, publish monthly data on theevolution of the RES account with rolling projections over the following 24 months fromthe date of publication (monthly/continuous). These projections will have to provide abaseline and a normative scenario to bring the debt down to zero by end-2014 and supportpolicy choices after 2014.3. To ensure the financial sustainability of the RES account, and ensure that no excessiveburdens are put on consumers, introduces constraints that will cap all the newly-installedRES capacity receiving incentives, effective immediately (replacing the current freeze).Draft legislation to introduce such cap shall be submitted for consultation to EC/IMF/ECBby April 2014.4. Following the entry in operation of the electronic registry of RES installations (includingPV rooftops), the Government ensures the monthly publication of a report, detailed bysource, on the state of existing installations (installed power and production). The reportalso includes data on the evolution of the licensing and installation process for forthcomingnew plants (continuous).6.1.4. Liquidity and arrears in the energy sector1. The Government makes payments to clear all general government arrears with PPC, tocontribute to solve the liquidity issues in the energy sector, and in view of the upcomingprivatisation of PPC (June 2014).2. The Government ensures that there is no further accumulation of public sector arrears toPPC, and that the respect of the obligations of the public sector following the transpositionof the Late Payments directive is guaranteed (continuous).3. With a view to a complete clearing of existing arrears in the energy markets by the end of2014, the Ministry of Energy, in close cooperation with ADMIE and LAGIE, willcommunicate to the EC/ECB/IMF the detailed gross debt and credit positions of allparticipants in such market on a monthly basis (continuous).4. The Ministry of Energy, in close cooperation with RAE, will promote, and facilitate throughintermediation, the clearing of existing obligations among energy market participants, basedon a fair sharing of the outstanding debt (continuous).5. RAE implements and monitors adequate regulatory provisions for netting of credit and debtpositions by all actors in the energy markets, including, inter alia, terms for clearance ofdebts and payment of interest and penalties in line with Directive 2011/7/EU on latepayments. Regulatory provisions should ensure equal treatment for all participants, avoidingany distortion or unjustified advantage coming from belonging to vertically integratedcompanies (continuous).
Memorandum of Understanding on Specific Economic Policy Conditionality6.1.5. Energy MarketsGreece is undertaking several important reforms in the energy markets.In the electricity market, the privatisation of PPC is being carried out following a strong commitmentof the government, while an action plan is being implemented by the regulator to transition to the EUtarget model.In the gas market, following the adoption of Law 4001/2011 to transpose the Third Package, the saleof DESFA, provided regulatory approvals are met in a manner fully compliant with EU law, as anentity fully unbundled from DEPA is certainly a positive step towards a more mature model ofregulation. The privatisation of DEPA will also be an important element. However, several issues needto be addressed in the gas market in order to fully reap the benefits of the privatisation and transitionto a more mature gas market model.6.1.5.1. Electricity market1. Based on the plan for the transitional reform of the electricity market adopted by theGovernment and RAE in consultation with the European Commission, the Government andRAE implement the following actions:i. Review the recently introduced capacity payment mechanisms to ensure costeffectivenessand compliance with the guidelines on "Generation adequacy in theinternal electricity market" released by the European Commission (SWD(2013) 438)and EU State-aid rules:ii.iii.a. RAE will present its first findings by April 2014.b. Following consultation with ADMIE, and taking into account the system needsidentified in the document “Introducing the interruptibility service for the electricsystem in Greece”, the review will be finalised by May 2014, and will include anassessment of the capacity needs of the system and a timeline to progressivelyreduce its cost.c. The complete revised mechanism, including the first cost reduction, will enterinto force effective 1 st July 2014.Introduce auctions of NOME-type products, limiting the participation in auctions togenerators and suppliers:a. Public consultation, including the structure and the parameters of the auctions ofNOME-type products, will be launched by April 2014.b. The final legal provisions will be adopted by June 2014.c. The reference price for auctions will be set in consultation with the EuropeanCommission, and auctions will start on 1 st September 2014.Following the removal of the 30 percent rule, phase out the full recovery of variablecosts (May 2014).2. In close collaboration, the Ministry of Energy, RAE, ADMIE and LAGIE will draw up aroad map, in consultation with European Commission Services, comprising a list of actions,timelines and tasks to be attributed to each of these institutions for the implementation ofthe reform of the electricity markets with a view to create more competitive and integrateelectricity markets, and taking into account other actions affecting the energy markets,including the privatization process of PPC. Such list will foresee, at a minimum, thefollowing actions (May 2014):i. The transition from a pool based system to separate day-ahead and intra-dayelectricity market.ii.The transition to the "target model", fostering market integration.207
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OUTLINE OF THE REPORTEXECUTIVE SUMM
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LIST OF GRAPHSGraph 1. Economic cli
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ACKNOWLEDGEMENTSThe report was prep
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European CommissionThe Economic Adj
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1. INTRODUCTION1. INTRODUCTION1. Th
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2. MACROECONOMIC AND FINANCIAL DEVE
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2. Macroeconomic and financial deve
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Chart 3Graph 2.3. Exports of goods
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European CommissionThe Second Econo
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Chart 18Graph 13.1. Distance to Fro
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4. DEBT SUSTAINABILITY ANALYSIS AND
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4. Debt sustainability analysis and
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ANNEX 2: MACROECONOMIC FORECASTANNE
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ANNEXTable B1: USE AND SUPPLY OF GO
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ANNEXTable C1: FISCAL ACCOUNTS AND
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ANNEX 3: UPDATED PROGRAMME DOCUMENT
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Memorandum of Understanding on Spec
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