New Greek renewables law would slash red tape - minister

* New renewables law would shorten licensing to 10 months

* Greece to start public consultation on potential law

ATHENS, Dec 3 (Reuters) - Greece's new renewables law will slash red tape to unblock hundreds of stranded renewable energy projects, a government minister said on Thursday.

The draft law, to be submitted soon to public consultation, will cut licensing times for renewable energy projects to eight to ten months from three to five years, Energy Minister Tina Birbili said during a televised cabinet meeting.

"There is tremendous investor interest, but too much bureaucracy," Birbili said.

The backlog of projects waiting for approval has a total capacity of about 57,000 megawatts, which is about 50 times larger than the number of projects operating, she said.

Greece produces just over 3 percent of its energy from wind and solar power.

And Greece's new Socialist Prime Minister George Papandreou wants to tap the country's significant wind and solar power potential to produce a fifth of its total energy and 40 percent of all its electricity from renewable sources by 2020.

The Mediterranean nation offers subsidies and incentives to local renewable players such as Spain's Iberdrola (IBE.MC) and Acciona (ANA.MC), but red tape offsets these benefits, creating a huge licensing backlog.

Greece relies on lignite, a polluting form of coal, to cover the bulk of its energy needs. The nation has no significant oil and natural gas deposits. It has no nuclear power plants and the government rules out building any plants. (Reporting by Harry Papachristou; Editing by Sharon Lindores) ((harry.papachristou@thomsonreuters.com; +30 210 3376455; Reuters Messaging: harry.papachristou.reuters.com@reuters.net))