Renewable energy: untapped fuel for Mediterranean economies

Despite the fact that in the sunniest region of Europe there is a vast potential of energy from the sun (and wind), renewable energy is a resource that is being ignored. In a time when Southern European countries are struggling with debt and stagnating economies, clean renewable energy solutions can be a smart way to go. Expert studies commissioned by Greenpeace Croatia, Greece, Italy and Spain show how the Southern European governments can boost their economies, reduce greenhouse gas emissions and accelerate their energy transition by enabling massive small-scale investments into renewable energy and energy-efficient solutions. Dejan Savic summarizes the findings.

Solar power on Mallorca

The Mediterranean economies could become the renewable powerhouses of Europe.

Croatia: thousands of new jobs and savings on energy imports

The study for Croatia builds mostly on energy produced by wind, solar and hydro power, but also includes biomass, landfill gas and geothermal plants as sources. The scenario foresees larger usage of electrical vehicles in the transport sector and shows multiple benefits from adopting clean energy solutions in hotels, vacation camps, schools and farms across the country. Solar power will become the cheapest energy source in Croatia in the coming years, with the biggest potential and opportunity for a massive upscale of investments. Transition to 100% renewable energy could save €4 to 5 billion a year in energy imports alone. Proposed projects would create up to 3,600 jobs in the construction of power plants and 8,000 permanent jobs in operation and maintenance annually by 2050. Installing PV on all schools would require a one-off investment of €60 million, yet it would produce annual savings of over €7 million.

Greece: a stop to energy poverty through massive energy efficiency program

Measures envisaged for Greece can realistically cut energy costs, reduce dependence on energy imports and provide large amounts of clean energy by promoting energy efficiency and investments in solar energy. Implementing the proposed massive energy efficiency program (involving one million buildings between 2016-2025) would put a stop to escalating energy poverty, help modernize the economy and create tens of thousands of new jobs. Furthermore, it has the potential to reduce Greece’s CO2 emissions by almost 10%. The study proves that smarter use of existing resources can finance big climate and energy ambitions, even in a troubled economy and under creditors’ supervision. Available resources include the European Structural and Investment Funds, carbon emission credits, bank lending and a smarter use of the current property tax. Greece can use funds that are currently unused or being misused to finance the proposed programs, particularly from the European Structural & Investment Funds (ESIF), Emission Trading Scheme (ETS) auction revenues, and Property Tax. In the longer term, Greece can also include tax returns or credits. These investments assume that households and SMEs contribute 11-30 per cent of the total intervention cost. The identified funding sources could subsidise the renovation of 700,000 homes and premises of SMEs. The study proposes two scenarios in which Greece’s public utility (PPC) relies on solar power to pass on savings of up to € 1,380 per consumer per year in the form of lower energy bills. One scenario considers the possibility that PPC would mainly use ETS money to fund the installation of 2kWp small PV systems for 300,000 low-revenue households in 2016-2020. The alternative scenario considers the option of PPC investing massively into solar energy over a 10-year period, creating PV parks with a total capacity of 1,900MW at an estimated cost of €1.45 billion, instead of spending €1.4 billion to construct a new lignite power plant (Ptolemaida 5). In the long run, PPC can take advantage of cheaper solar production and savings in emissions credits to save up to €3 billion by 2045. PPC can use this profit to return free solar power to 300,000 households in need. The proposed total investments for Greece constitute around 1.5% of the identified energy efficiency needs across the EU until 2020, based on Commission’s estimates.

Italy: small islands as a decarbonisation model

Italian islands, and potentially islands all around the world, have the potential to go 100% renewable and can do it very quickly. There are 20 small islands in Italy which are not connected to the national grid, and all of them are producing almost all their energy from diesel. Three islands in the Sicilian channel (Lampedusa, Pantelleria, Favignana) are considered to be case studies in the report. On small islands, not connected to the Italian mainland grid, the cost of producing 1 kWh is six times higher than the average electricity cost in Italy. The main obstacle for the development of renewables on Italian islands is the rate mechanism of local utilities which guarantees cost recovery for every euro they spend. This has made it almost completely unnecessary – from an economic perspective – to diversify towards renewable energies and to improve the efficiency of electricity consumption. Yet, fossil fuel subsidies cost Italian citizens €70 million per year.

Spain: 100% renewable Canary Islands providing cheaper electricity

For the Canary Islands, in Spain, the study shows that 100% renewable energy can deliver all energy services, including to very distant communities. The costs of electricity generation on the Canary Islands are among the highest in the European electricity markets due to a high dependence on oil. With an additional investment into renewable energy and energy savings of € 300 million per year an annual savings of € 1.1 billion could be achieved. This will lead to a total saving of €42 billion in fossil fuels between now and 2050, and a reduction of 9 €/cents per kWh in generation costs. It would also allow for the implementation of energy efficiency measures that would in turn reduce demand by 37% compared to current consumption. Switching all energy and transport to renewables would nearly cancel out the islands’ greenhouse gas emissions, achieving 99.7% reduction in emissions from 14 million tonnes of CO2 per year to 0.02 million tonnes CO2 per year by 2050, excluding extra-insular transportation.

The findings described above show that even the most infamously economically embattled country in Europe, Greece, would benefit hugely from moving to renewable energy and greater energy efficiency. For those in better economic shape the energy transition is much easier to be implemented. In order to take advantage of vast domestic clean energy potential, European and national policies need to change in order to guarantee a stable investment environment for renewable generation, and in particular, decentralised, community- and citizens-owned renewable electricity projects. It is time for the EU to move beyond an energy market that favours polluting and expensive conventional power generation, like coal and nuclear power. The market is currently dominated by a small number of sellers, reducing competition and potentially leading to higher prices for consumers. European energy markets should instead embrace renewable energy and empower consumers to get involved in the production of energy at local level.

To facilitate the energy transformation, governments must liaise with local energy producers and provide them advice on the tariffs and financial liabilities that come with access to supply markets, energy storage and demand response. In addition, dedicated programs to reduce energy bills through energy efficiency measures and renewable energy projects like rooftop PV should be put in place for low income households.

Studies are proving that this not only a climate solution, but it also makes great economic sense. Due to recent years’ price falls in solar energy technologies it’s time to see the Mediterranean, not only as one of the best summer destinations for our holidays, but as a possible new energy powerhouse of Europe.

Dejan Savic is the Coordinator of the Solutions for Mediterranean Project with Greenpeace Central and Eastern Europe.

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