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Spain

Spain

Future looks bleak for wind market in Galicia

SPAIN: Policy chaos, legal debacles and exacting taxes in Galicia threaten to keep the lid on the formerly roaring regional wind market, even after the national freeze on new wind projects is eventually lifted, according to regional wind association Ega.

Industry sources linked to Ega suggest developers plan to pull out of projects totalling hundreds of megawatts. Ega declined to confirm, arguing it was still "analysing the impact of recent events".

In September, Galicia's supreme court threw the sector into disarray when it upheld as legally valid a public wind competition cancelled by the governing conservative PPG party after it came into office in 2009.

The previous government, a coalition between the socialist PSG party and the nationalist BNG party, had allocated 2.3GW of projects under the competition. The PPG, claiming the process had been riddled with irregularities, held a new competition in 2010, allocating 2.33GW.

It is not currently clear what the implications of the judgement will be. The BNG claim the regional government must now resume processing the 2009 allocations. Developers and turbine manufacturers alike fear that would cause bottlenecks with over 4.5GW of projects competing for both limited grid space and administrative resources.

Zero effect

Regional PPG president Alberto Feijoo insisted the court ruling "has no practical effect on the current allocation". At most, he conceded developers of the cancelled allocations may now reclaim administrative costs. They may not, he insisted, sue for business opportunity losses - as argued by the PSG - as developing concessions were merely for broad prospecting rights not firm contracts.

Developers were already frustrated, according to Ega secretary general Inigo Muniozguren, after the government introduced a new tax in July without warning. The measure, to buoy up ailing regional finances, charged wind developers a one-off levy of EUR40,000 for every megawatt they solicited.

That came in addition to Spain's first "visual impact" levy on wind power, introduced in Galicia in 2010 and later emulated in several other regions. That tax charges EUR2,300-5,900 annually per wind turbine, according to the number of wind turbines installed.

Muniozguren claimed then that the only reason developers were not cancelling their projects over the one-off levy was because they would lose a EUR20,000 deposit put down for every megawatt when applying for licences. He also described the regional wind market as "lifeless" with "almost no chance" of resuscitation.

In 2007, the regional government claimed Galicia was Europe's top wind region with 3GW online. Since then, less than 500MW has gone up with none at all during 2010-11 due to political infighting.

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