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EU: Solar electricity will help bail out Greece

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Greece commits to $21 billion of debt repayment from solar farms that will transmit electricity across Europe. One catch: It hasn't built the plants yet. Investors welcome.

Greece commits to $21 billion of debt repayment from solar farms that will transmit electricity across Europe. One catch: It hasn’t built the plants yet. Investors welcome.

By now you’ve probably seen the news that the European Union will establish a staggering $1.4 trillion (€1 trillion) rescue fund to bail out financially wrecked countries like Greece. Yes, trillion.

I’ll spare you the explanation of where that money will come from (as if anybody really knows, hello China) except for this slice that should interest SmartPlanet readers: Greece has agreed to pay up to $21.2 billion of its debt from solar electricity generated by its planned 10-gigawatt Project Helios.

“Greece commits future cash flows from Project Helios or other privatisation revenue in excess of those already included in the adjustment programme to further reduce indebtedness of the Hellenic Republic by up to 15 billion euros with the aim of restoring the lending capacity of the EFSF,” the EU said in a statement issued from its late night emergency summit on the eurozone debt crisis.

EFSF is the name of the bail out fund. It stands for the European Financial Stability Facility. It has stood at $620 billion (€440 billion) and will now more than double to $1.4 trillion. The most immediate beneficiary will be Greece. The wee hours summit also forced banks holding Greek debt to take a 50% loss on the repayments, and called for banks to raise more capital to protect against national defaults. Italy and other European countries are financially teetering.

To help do its share, Greece has agreed to use the photovoltaic farms of Project Helios to pay off debt.

But as with many aspects of the complex European financial mess, there’s still a lot of uncertainty surrounding Helios. For one, nobody yet seems to know who will pay for it. The Greek government is providing incentives to foreign investors in an effort to attract up to $28 billion to build it. Helios would have a capacity of 2.2 gigawatts by 2020, and 10 gigawatts by 2050. It would export electricity to creditor nations in Europe, helping Greece pay off debts and helping European nations meet renewable energy targets.

The ESFS is meant to ease the Greek rescue burden of fellow eurozone countries like Germany. Ironically, Project Helios could also hurt Germany, which is home to the majority of companies that back Desertec, a rival, grand solar electricity scheme that would provide 15 percent of Europe’s electricity from N. Africa and the Middle East by 2050. Desertec envisions using solar thermal electricity - driving turbines with steam created by heating water with the sun - while Helios looks set on photovoltaics.

Another fold in the convoluted cloth of Europe.

Photo: Wikimedia

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Mark Halper

Contributing Editor

Mark Halper has written for TIME, Fortune, Financial Times, the UK's Independent on Sunday, Forbes, New York Times, Wired, Variety and The Guardian. He is based in Bristol, U.K. Follow him on Twitter. Disclosure