* Industry leader says Greece could miss energy targets
* Wind farms need up to 6 years to get licence
By Harry Papachristou
ATHENS, Oct 23 (Reuters) - Greece, one of Europe's most windy and sunny countries, risks missing its green energy targets and losing billions of euros in investment because of bureaucratic obstacles, a top industry player said on Friday.
Greece's new socialist government has a target to produce one fifth of the country's energy from clean sources by 2020, said George Peristeris, Chairman of the Association of Renewable Electricity Producers.
"This target is feasible, provided the government goes about it seriously today, as we speak," Peristeris told Reuters in an interview. Greece now produces just over 3 percent of its energy from wind and solar power, according to Greenpeace.
The government is set to unveil a law to boost the renewable energy sector next month.
But red tape, legal confusion and local protests have been dogging the industry for years. Authorities sit on a pile of more than 1,000 unprocessed applications for green energy projects, 90 percent of which concern wind farms.
"Licensing is a real pain, it takes incredibly long," Peristeris said. "About 2.5 billion euros in Greek and foreign private capital is just sitting there, asphyxiating."
The paperwork for a wind farm takes two to six years, compared with 18 months for a thermal power station, he added.
STIFLING BUREAUCRACY
Renewable energy producers in Greece benefit from guaranteed 20-year power purchase agreements at high, fixed prices. Cash grants, tax benefits or labour cost subsidies can cover up to 40 percent of the overall investment.
But the bureaucratic hurdles offset these benefits. Some investors, including Terna Energy, a company in which Peristeris holds 22 percent, have started diverting funds to other countries in southeast Europe.
"We are now going ahead with investments in other countries because we've seen no political will in Greece to facilitate these projects," Peristeris said.
Greece's archipelago geography provides it with one of the highest wind potentials in Europe, on a par with clean energy pioneer Denmark. Windswept islands dot the Aegean Sea.
But to exploit this potential, Greece's outdated electricity grid needs investment to extend to these remote parts of the country, where winds are strongest.
"This issue has been under discussion since 2002 but it is moving at a snail's pace," Peristeris said. Most big islands have their own autonomous grids, operating on heavy fuel oil.
According to Athens Polytechnic, the current grid can only support up to 5.5 gigawatts (GW) from renewables, compared with 12 GW required to meet the 20 percent target.
Unless renewable energy takes off, Greece will continue to depend on oil and lignite, a cheap but highly polluting form of coal, to produce the bulk of its energy needs.
State-controlled electricity utility Public Power Corp is the EU's second-biggest lignite producer and runs some of Europe's dirtiest power plants. (Editing by Peter Dinkloh)