Greece, Renewable Energy Investments and the New York Times

The New York Times recently published another article on Greece which provides an extremely biased viewpoint and reveals an unsettling lack of knowledge of the underlying business economics and realities of the topic under investigation.

In “Struggling to Stoke Economic Growth in Greece”, published on June 19, 2011, Liz Alderman describes the alleged government’s reaction of Mr. George Peristeris, Chief Executive of GEK Terna, as follows:

So when George Peristeris, the chief executive of Gek Terna, a large energy company, wanted to plow funds into an offshore wind project, he thought he would be welcomed with open arms. But it turned out that the government decided it could run things better. “Private investors with money in hand were shut out,” Mr. Peristeris said.

In fact, it is hardly surprising that George Papandreou’s government may have given this reaction right after its election. This is due to the simple fact that even today, the government does not have a fully-integrated strategy for renewable energy. This is a highly complex subject, but it boils down to two essential factors:

a.  Energy generated from renewable sources is between 2x and 4x times more expensive than energy from conventional sources. In Greece, the average price per KW produced by the Public Power Corporation from existing conventional sources (and hydropower) is about 11 cents, while the average price/KW for wind power is approximately 20-25 cents, and for photovoltaic power above 40 cents. Given that renewable energy investments are being financed primarily by a high feed-in tariff, it is no surprise that the government needs to expand generation capacity carefully, in order to avoid excessive investment which would further bankrupt the country.

b.  The challenge of renewable energy investments is not to find available land or offshore areas to place them, but to ensure that they are as close to distribution networks and demand centres as possible. Why? Because (a) electric current transmitted over a distribution line loses power the further it is transmitted, and (b) the costs of connecting power generation units to the distribution grid is expensive, and is the responsibility of the investor. One of the major achievements of the former Minister of Environment and Energy, Ms. Tanya Birbili, was to begin the process of approving an energy map and zoning rules for renewable energy investments, including offshore wind farms. With such guidelines, it is unreasonable and illogical to expect that any investor showing up with his or her own plan would receive approval.

I presume, judging by what has occurred in Greece since the purported time of Mr. Peristeris’ contacts with the government, that things have improved significantly as will be explained below. I also presume that the journalist's task is to investigate this situation, not simply rely on passive reporting. To uncritically transmit the personal experience of a single executive, based on a single reported contact with the government, and then generalise from here to all investors and investments in Greece, is poor journalism to say the least.

This is confirmed by fact that renewable investments in Greece are surging and are among the most successful areas of investment:

·   On September 29, 2010, the Greek Public Power Company announced on a strategic investment of up to EUR 2 billion in renewable energy projects in cooperation with EDF Energies Nouvelles, the renewables energy division of Électricité de France (EDF), the world’s largest electricity generator. This joint venture is studying at least two investments: a 250 MW wind park in Florina as well as a hybrid unit in Crete which includes 90 MW generation with energy storage. EDF and PPC are already cooperating on a 38 MW wind park in Beotia.

·    RF Energy, a private firm, is in the process of installing 21 wind parks in Evoia with a total generating capacity of 579 MW, worth approximately EUR 984 billion. This investment has been underway since 2009.

·   DTS Hellas, a private firm, signed an agreement with China's Dongfang Electric International Corporation on June 6^th 2011, for the installation of two wind energy projects, 250 and 750 MW, for a total value of EUR 2.5 billion.

·   The government has greatly expanded the scheme for renewable energy projects, in both photovoltaics and wind energy, concerning both household and commercial power generation. Over EUR 1 billion in projects have been submitted and partially approved since mid-2010. These are “decentralised” projects: they can be submitted by any household or any investor. These calls have been open since mid-2010 and have been widely reporting in the Greek press.

Equally significantly, the Ministry of Development has set up a specific service, the Investor Support Service for Renewable Energy Projects. Together with the Invest in Greece agency, several billion Euros in large-scale projects are currently under review. The government has also passed Law 3851/2010 on renewable energy investments and the acceleration of the licensing process.

None of these investments or regulatory changes is mentioned in the NYT article. Yet taken together, these investments amount of over EUR 10 billion, in a country with a GDP of EUR 220 billion.

Adding insult to injury, the article closes with a quotation from Mr. Demetri Politopoulos, who set up a money-losing brewery in northern Greece, and has apparently become the ultimate authority on investments in Greece for the New York Times:

“What’s happened here in the last few days is Looney Tunes,” said Demetri Politopoulos, chief executive of the Macedonian Thrace Brewery, who himself ran into thickets of regulatory hurdles when he tried to make new investments in Greece. “We’re trying to attract investors? Good luck.”

My opinions on the reason for the failure of this investment and the credibility of its sponsor are seen in my blog entry: “What’s Broken in Greece: Ask an Entrepreneur”.

Again, I have to ask: shouldn’t a responsible journalist seek a fair and balanced opinion on investments in Greece? Shouldn’t a journalist seek out at least one entrepreneur who has actually succeeded in this country? Are failed investment cases the only authority for the New York Times?

I also have to ask why there is such a dearth of objective reporting on Greece. Is it because journalists simply don’t know what they are talking about in terms of business sense? Is it because “fair and balanced”, or “objective journalism” no longer apply? Is it because newspapers have editors who don’t edit? Is it intellectual laziness? Long distance reporting? Bad fixers?

By failing to ask the right questions, interview the right people, and understand the basic business logic of what is being reported, the New York Times is failing its readers and misrepresenting the reputation of a country which, whatever its present difficulties, deserves the benefit of the truth. The fact that this occurs so soon after the Judith Miller scandal on Iraqi Weapons of Mass Destruction indicates that regrettably, little has changed.

© Philip Ammerman, 2011