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Market Status: Spain - Former stronghold still out of the game

SPAIN Spain's frozen wind market, with just 28MW of new capacity installed in 2014, pins most hope of recovery on the general election in November.

The incumbent right-wing government's 2013 austerity electricity reform, which ended the feed-in tariff (FIT) for new capacity, has completely busted the market, says Magnus Dale, an analyst at IHS Consulting. While the pre-2008 boom still leaves the country fourth in global cumulative wind capacity ranking for 2014, with 23GW, Spain's wind energy association, AEE, does not envisage any new build this year.

IHS, however, believes around 300MW could come online to 2020, including 105MW and 120MW pushing through 2015 and 2016, respectively.

Both AEE and IHS also see a glimmer of hope in the Canary Islands, where the government reinstated the feed-in tariff for wind last year. Before the end of March 2015, the government had aimed to publish the rules and feed-in tariff rate for developing 450MW on the islands. Yet, given investor insecurity following retroactive changes to pay mechanisms across Spain, AEE doubts whether new capacity contests in the Canaries will attract many contenders.

On the mainland, the only subsidy available is a "reasonable profit" standard, set at 7.5% of pre-tax turnover. A new government-imposed 7% generation tax, plus regional taxes on wind, cancels out most if not all of the "subsidy", says AEE. Additionally, developers must open up to competing bids. The winner is the one offering the highest discount on the subsidy. "It's hard to find the profit," says an AEE spokesperson.

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