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2. Promotion of Electricity Generation from Renewable and Gentle Energy Sources in Greece – Approval and Subsidization of Relevant Investment Plans

(Valid for applications submitted up to 29.01.2010)

The following article provides information on the procedure for applying for and granting funding and subsidies in accordance with the modified Greek Development Law N.3299/04 for investment plans in Greece in the sector of electricity generation from renewable and gentle energy forms, and in particular from wind energy, photovoltaics, PV plants, solar energy, hydropower, geothermal, and biomass (regardless of installed capacity), as well as for projects involving the parallel generation of electricity and heat.

The respective information on the type and amount of legally stipulated funding and subsidies, as well as the mandatory prerequisites and framework conditions, reflect the current global Greek legal situation. For binding information on individual projects, please contact our law firm in Thessaloniki.

Note 1: The following statements only concern those subsidy applications that were submitted up to and including 29.01.2010. Since a large number of subsidies and other forms of funding were still granted today on the basis of the aforementioned law, the need for observing and thus also explaining these provisions continues to exist. However, it must be explicitly noted that according to the currently applicable provisions of Law 3908/2011, photovoltaic plants are no longer subsidized. The promotion of these plants has been explicitly excluded by law.

Note 2: This article is also available for download in PDF format under the title Promotion of Investments in Greece for Electricity Generation from Renewable and Gentle Energy Sources.

3.1. Subsidy Rates for Investments in Greece in the Sector of Electricity Generation from Renewable and Gentle Energy Sources

3.1.1. Investment Plans for Electricity Generation from Solar Energy and Wind Energy

Zone Areas Small Companies Medium Companies Large Companies
A Prefectures of Attica and Thessaloniki, excluding the Industrial and Business Areas (BEPE) and the islands of these prefectures, which are assigned to Zone B 40% 30% 20%
B Region of Thessaly, South Aegean, Ionian Islands, Crete, Central Macedonia, West Macedonia, and Greek mainland. Islands and BEPE of the Prefectures of Attica and Thessaloniki. 40% 40% 30%
C Region of East Macedonia and Thrace, Epirus, North Aegean, Peloponnese, and West Greece. 40% 40% 40%

3.1.2. Investment Plans for Electricity Generation from Gentle Energy Forms (Excluding Solar and Wind Energy)

Zone Areas Small Companies Medium Companies Large Companies
A Prefectures of Attica and Thessaloniki, excluding the Industrial and Business Areas (BEPE) and the islands of these prefectures, which are assigned to Zone B 40% 30% 20%
B Region of Thessaly, South Aegean, Ionian Islands, Crete, Central Macedonia, West Macedonia, and Greek mainland. Islands and BEPE of the Prefectures of Attica and Thessaloniki. 50% 40% 30%
C Region of East Macedonia and Thrace, Epirus, North Aegean, Peloponnese, and West Greece. 60% 50% 40%

The above percentages refer to aid for subsidization (non-repayable grants from the state to cover part of the subsidized costs of the investment plan) or subsidization of leasing (coverage by the state of part of the paid installments for a lease concluded for the acquisition of new technical and other equipment) or subsidization of the costs of jobs created by the investment project (coverage by the state, for two years, of part of the wage costs of the jobs created within the first three years from the completion of the investment plan).

Regarding tax exemption (exemption from paying income tax on undistributed profits from the sum of the company’s activities during the first ten years from the realization of the investment plan, upon the formation of a tax-free reserve of the same amount), a percentage of 60% applies to geographical Zone A and 100% to the remaining areas.

3.1.3. Minimum Total Budget of Investment Plans for Inclusion under Law N.3299/04

Investment plans that fall under the requirements of Law N.3299/04 must exceed the minimum amounts listed below, depending on the case:

  • For large companies € 500,000
  • For medium companies € 250,000
  • For small companies € 150,000
  • For very small companies € 100,000

The size of the companies is determined as follows:

Very Small Company Employs 0 to 10 persons + its annual business volume or its annual balance sheet is under 2 million Euros + meets the criterion of independence.
Small Company Employs less than 50 persons + its annual business volume or its annual balance sheet is under 10 million Euros + meets the criterion of independence.
Medium Company Employs less than 250 persons + its annual business volume is under 50 million Euros or its annual balance sheet under 43 million Euros + meets the criterion of independence.
Large Company Employs either more than 250 persons or its annual business volume is over 50 million Euros or its annual balance sheet over 43 million Euros
Criterion of Independence: No other small or medium company (according to the definition) holds a share in the company that exceeds 25% of the share capital.

3.1.4. Types of Support – Amounts of Subsidy

Investment plans that fall under Law N.3299/04 can be alternatively promoted in one of the following ways:

a) Subsidy (a sum of money provided free of charge by the state to partially cover the supported costs of the investment project) or Subsidization of Leasing (partial coverage by the state of the paid installments for a lease concluded for the acquisition of new machinery and other equipment).

b) Tax Exemption (exemption from paying income tax on undistributed profits from the sum of the company’s activities during the first ten years from the realization of the investment plan, upon the formation of a tax-free reserve of the same amount).

c) Subsidization of the Costs of Employment Created by the Investment Plan (partial coverage by the state, for two years, of the wage costs of the jobs created within the first three years from the completion of the investment plan).

Regarding the alternative support methods listed above, we note the following:

a) The case of Subsidy and Leasing Subsidization is advantageous if the investment holder does not have all the necessary capital funds for the intended investment.

b) The case of Tax Exemption is advantageous if the investment holder a) has all the necessary capital for the intended investment and b) a high profit margin exists.

c) The case of Subsidization of Employment Costs is advantageous if the investment holder a) has all the necessary capital for the intended investment and b) the company is labor-intensive.

3.1.5. Investor’s Own Contribution

The percentage of self-participation in investments that are classified under the funding status of subsidization or leasing subsidization cannot be less than 25% of the subsidized costs. It is not possible to reduce the percentage of self-participation in the investment approved by the granting decision after the issuance of this decision.

The investor’s self-participation in investments that are placed under the funding status of subsidization or subsidization of leasing constitutes company capital. For newly established companies, their paid-in capital is understood as the investor’s own contribution.

For existing companies, the investor’s own contribution is understood as:

a) The amount of the increase in company capital resulting from new cash deposits by the shareholders. The increase in capital of an S.A. or Ltd. must occur after the submission of the application for inclusion under the provisions of Law N.3299/04.
The increase in capital of an S.A. or Ltd. can also take place before the submission of the application for inclusion, provided that it was realized within the last twelve (12) months prior to applying for inclusion, based on the corresponding resolution of the General Assembly of Shareholders or partners for the purpose of using the new capital as self-participation in the specific investment, and that until the time of applying for the inclusion of the investment or the plan, this capital is demonstrably available funds of the company and has not been consumed.

b) Where applicable, the tax-free reserves, as provided for by existing legislation, excluding the ordinary ones, without requiring an increase in the share or registered capital, and under the condition that these reserves cannot be distributed before the expiry of five years from the completion and commencement of production operation of the investment.

These reserves appear in the company’s books in a separate account. In the event of their distribution before the expiry of the five years, the stipulated penalties will be imposed (the inclusion decision may be revoked and the subsidy may have to be repaid, or it may be withheld or partially repaid).
The taxable (extraordinary) reserves of a company constitute a self-participation in the investment, provided that in the stage of assessing the investment, the company’s sufficient liquidity is checked and determined after the withdrawal of the amounts that constitute the self-participation.

Prerequisites, Restrictions, and Conditions for the Investment Loan

If the investment plan proposed for funding also includes the use of a loan, it must:

  1. be of at least four years duration,
  2. take the form of a bank loan or a publicly or privately issued bond or a loan from other financing organizations, excluding the form of a current account,
  3. be taken out for the realization of the investment plan, as will be expressly stated in the relevant loan agreement, and
  4. have been approved by the financing bank or the financing organization at the time of applying for inclusion under the funding of the present law. The corresponding document of its approval must state the conditions of granting the loan, specifically its amount, duration, interest rate, grace period, and the collaterals for its granting, and be included in the file submitted with the application for inclusion.
  5. The investment loan can also be taken out in foreign currency.

3.2. General Information on Subsidized and Non-Subsidized Costs under Law N.3299/04

3.2.1. Subsidized Expenditures:

  • Costs for intangible investments for consultant studies’ fees are supported according to the restrictions of the European Committee. Eligible for funding are studies for the organization of management, the reorganization of partial functional areas of the company, the replanning of entrepreneurial processes, the standardization of processes, market research, the preparation of studies for the distribution of products or services, as well as comparative performance studies. The aforementioned studies must be directly assigned and defined and serve the realization of the investment plan included under the provisions of Law N.3299/2004.
  • The granted percentages of subsidization for consultant studies’ fees cannot exceed the maximum limit of fifty percent (50%) thereof.
  • Support regarding the costs for consultant studies is granted only to small and medium-sized companies in a percentage that does not exceed 10% of the costs of the investment plan, and does not relate to their usual operating costs.
  • The supported costs must relate to tangible and intangible operating assets. Operating costs are not supported.
  • The share of funding for intangible operating assets will not be higher than twenty-five percent (25%) of the costs of the investment plan for large companies.
  • The intangible operating assets must represent depreciable assets that are used exclusively and solely in the subsidized investment and are acquired from third parties under market conditions.

3.2.2. Non-Subsidized Expenditures:

  • Operating costs
  • The purchase of passenger cars with up to six (6) seats.
  • The purchase of office furniture and equipment.
  • The construction or expansion of building facilities on a plot of land that does not belong to the investment holder.
    By way of exception, the following may be subsidized:
    a) The construction of building facilities on a plot of land not belonging to the investment holder, provided that the use has been ceded for a period of at least fifteen (15) years by the State, the Greek Organization for Tourism, the “Greek Tourist Real Estate S.A.”, the WIPE ETWA, including those in the status of a free zone, other WEPE (WIPE, WIPA, and WIOPA), the Greek Olympic Committee, the “Olympic Real Estate S.A.”, the organizations of Local Self-Government 1st and 2nd degree, corporations or foundations, as well as Technoparks for the purpose of constructing or expanding buildings within Technoparks.
    b) Likewise, the construction of building facilities on a plot of land that does not belong to the investment holder, but has been leased by the state or legal or natural persons for a period of fifteen (15) years, the lease contract has been registered in the land register, and the lessor has waived the right to self-use. The duration of the cession or lease is calculated from the date of the issuance of the decision on the inclusion of the investment. The intended leases are also agreed upon in a private written document. The signature on the document is certified by the tax authority with which it is also submitted. After the submission of the document by which the lease agreement is made, it is transcribed in the land registry office of the district of the property. From the transcription, the lease has the validity specified in Article 618 of the Civil Code.
    c) The realization of investments for electricity generation from renewable energy sources on a property whose use has been ceded or leased to the investment holder for a period of at least twenty (20) years from the date of the inclusion decision.
  • The contribution of the value of machinery and other operating assets to the company capital.
  • Investments aimed at the simple replacement of existing machine equipment, without bringing about the expansion, the change in the product, or the production method of an existing plant.

3.2.3. Supported (Eligible) Costs of the Specific Category of Investment Plans

  • The construction, expansion, and modernization of structural and special facilities and auxiliary facilities, as well as the costs of landscaping.
  • The purchase of active operating assets with a direct connection to a production unit.
  • Exclusively for small companies, the purchase of land, up to 10% of the required costs of the investment.
  • The purchase and installation of new modern machinery, special facilities, and other equipment. The leasing installments for new modern machinery and other equipment whose use is acquired.
  • The purchase and installation of modern systems for automation of processes and data processing, including the costs for the purchase of the necessary software.
  • The costs for studies aimed at the introduction, development, and application of modern technology, technical know-how, modern methods, and industrial plans for electricity generation.
  • The purchase of new means of transport for the transport of materials and products within the site of the included unit. The purchase of new mass transport vehicles for personnel. The purchase and installation of new modern equipment and the construction of facilities for the terrestrial or maritime transport of materials and products.
  • The purchase and installation of equipment intended for the accommodation, recreation, and communal dining of the company’s workforce, as well as rooms for personnel training, provided this takes place at the location where the company is established.
  • The costs of connection to the DEI network, according to the conditions of the connection project specified by the approving authority.

3.2.4. Remarks:

  1. The costs for the purchase of land are supported exclusively for holders of investment plans who are small or very small companies. The purchase value of the land, which is supported in analogy to the coverage factor of the unit, cannot be higher than 10% of the required total costs of the investment plan. The purchase price of the land, which must not exceed the value determined based on the intrinsic value, is derived from the notarial documents of property acquisition or, in the absence thereof, from information proving the intrinsic value of the land.
  2. The support of the purchase of active operating assets is possible under the condition that
    • they are directly connected to the production unit,
    • this unit has ceased operations,
    • they are acquired from an independent investor,
    • the relevant transaction is realized under market conditions,
    • previously granted funding is deducted
      Additionally
    • for the purchase of real estate (buildings)
      – their price will not be above the market value,
      – they comply with building and other legislation
    • for the purchase of used equipment
      – their price will not exceed the market value and must be below the cost of similar new equipment
      – the equipment will have the technical characteristics required for the proper operation of the subsidized production unit and comply with the applicable regulations and standards
      – certification of the material’s origin.

3.3. Main Criteria for the Inclusion of Investment Plans within the Framework of Funding under Law N.3299/04 (Assessment Criteria for Proposals)

3.3.1. Criteria for Assessing the Investment Holder

  • The characteristics of the holder and, in particular, their experience, the scale and results of their past activities, their liquidity, and economic standing. Also examined are the dynamism and success in previous and existing activities of the shareholders who control the majority of its interests.
  • In the case of a newly established holder, the dynamism and success in previous and existing activities of the shareholders who control the majority of its interests are also examined.
  • The ability to provide the equity to cover the financial needs of the company, and specifically the coverage of the self-participation in the investment and the required liquidity capital.

3.3.2. Criteria for Economic and Technical Assessment of Investment Plans and the Viability of the Investment

  • The completeness of the entrepreneurial planning, the finalized nature of the investment, and the organization of the company realizing it.
  • The prospect of dynamic development of the sector in which the investment is realized.
  • The prospects of profitable activities of the company to be founded or already existing, to the extent that it is influenced by the proposed investment.

3.3.3. Criteria Regarding the Investment’s Contribution to the Goals of the Development Law

  • The increase in employment and especially the creation of new permanent dependent employment positions for a long period.
  • The area of construction of the investment and especially characteristics of the prefecture of establishment.
  • The contribution of the investment to environmental protection and energy saving, whereby specifically examined are:
    • The contribution to the reduction of pollution of the soil, subsoil, water, and atmosphere, to the restoration of the natural environment, and to the recycling of water,
    • The introduction of environmentally friendly technology
    • The assessment of gentle energy forms, the replacement of liquid fuels or electrical energy with gaseous fuels or processed waste materials.
    • The saving of energy.
  • The competitiveness of products and services at an international level and, in particular, the company’s orientation towards export or the substitution of imports.
  • The quality of the produced products and the provided services.
  • The contribution of the investment to the social and economic development of the country.

3.3.4. Restructuring of the Required Investment Costs

With the decision certifying the completion and commencement of production operation of the investment, it is possible that, upon application by the investor, its subsidized costs are restructured, which in the event of an increase cannot exceed the already approved amount by more than 5%. For determining the amount of the restructuring of the investment costs, the price increases and differentiations that may have occurred in individual cost factors of the investment during the realization period are taken into account.

3.3.5. Completion Deadline – Possibility of Extension of the Deadline for the Completion of an Investment

The deadline for the completion of the investment provided for in the inclusion decision can be extended by a maximum of two (2) years, under the conditions that:

a) the application for the request is made no later than within an exclusive period of six (6) months from the expiration of the completion deadline initially determined in the inclusion decision, and

b) fifty percent (50%) of the approved project has been realized.

If the works are interrupted or delayed due to force majeure, the deadline for the completion of the investment can be extended by an additional period of the same duration as the interruption or delay.
In cases where force majeure occurs during the deadline for the completion of the investment initially determined by the inclusion decision, the corresponding request must only be submitted within the deadline for completion initially determined in the inclusion decision, without requiring the realization of 50% of the approved project.
If, without the occurrence of force majeure, the investment is completed within six months from the end of the initial or extended deadline, the certification of completion and commencement of production operation is permitted, provided that a corresponding application for certification is submitted and only the costs realized in a timely manner are subsidized.

3.3.6. Commencement of the Realization of Investment Plans

The commencement of the investment plans may take place after the issuance of a confirmation of eligibility, which is issued within 5 days and does not bind the assessment body.
Costs incurred before the date of issuance of the confirmation of eligibility are not added to either the subsidized costs or the investor’s self-participation.
The commencement of the realization of the investment before the publication of the inclusion decision in the Government Gazette is carried out at the exclusive responsibility of the investor and does not bind either the expert committee in its assessment or the administration in its decision regarding the inclusion of the investment under the provisions of Law N.3299/04.

3.3.7. Prerequisites, Restrictions, and Conditions for the Subsidization of Equipment Leasing

The subsidization of leasing for a program to acquire the use of new modern machinery and other equipment is granted under the condition that the equipment transfers to the ownership of the company after the expiry of the lease. This condition must be included in the relevant leasing contract. The duration of the leasing cannot exceed five (5) years.

3.3.8. Payment of the Investment Cost Subsidy

a) The payment of the subsidy amount occurs in installments in the following manner:

Half (50%) of the subsidy amount is paid after the realization of 50% of the investment and certification by the competent control body that this section of the project has been realized and that the investor has adhered to the conditions and prerequisites of the inclusion decision.

The remaining 50% of the subsidy amount is paid after the certification of completion and commencement of production operation of the investment by the competent control body.

The possibility of a single advance payment is offered, which cannot be higher than 50% of the subsidy provided for in the relevant decision on the inclusion of the investment, upon submission of a bank guarantee for the same amount increased by 10% from a bank lawfully established and operating in Greece. The

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