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Huge offshore appetite in Spain -- Not just a subsidy auction

The first offshore wind plants in Spanish waters will not be a reality until 2014 -- some 15 years after development started on the first project -- says industry ministry co-ordinator Santiago Caravantes. The delay is due to the strict environmental and processing timeframes outlined in Spain's offshore wind regulation, effective since August. Under the regulation, any site receiving a project application must be opened to public tender. Rigorous assessment of competing projects means the first license will not be issued before 2012, Caravantes says. "Then it will take two years to clear remaining hurdles and to complete construction."

With maximum revenues for Spanish offshore wind production estimated at EUR 164/MWh -- at least EUR 20/MWh more than in Britain or Germany -- the arduous course has not deterred developers. Projects in the pipeline far exceed 10 GW.

Enter Iberdrola

The latest major entrant is the world's biggest wind operator, Iberdrola. It has suddenly confirmed a 3 GW offshore portfolio. Meanwhile, wind plant owner Enerfin and utility Endesa are planning a joint venture, Consorcio Eólico Marino Cabo de Trafalgar, to compete across various sites. They also hope to complete Spain's longest standing offshore project, the 250 MW Cape Trafalgar development which kick-started life back in 1999. Other known offshore developers include international wind major Acciona Energía, Madrid's Capital Energy and Andalucian firm Age Eólica.

Spanish appetite for a slice of the offshore pie is large. Even without knowing if projects fall within no-go environmental areas, developers have flooded the ministry with applications covering nine key zones off the coasts of Galicia, Andalucía, Valencia and the Canary Islands. A Strategic Environmental Study, which will define the no-go sites within 52 potential areas, is due for completion by the industry ministry this month. Aside from the nine coveted zones, most of the rest are in deep waters of 35 metres and more.

Companies will compete for subsidies. A maximum production incentive of EUR 84.3/MWh has been set for offshore, which producers receive in addition to sales of electricity. The subsidy for onshore wind is currently EUR 29/MWh. The ministry, when assessing offshore bids, will favour those asking for less than the full incentive. "But that's only one factor of many to be assessed," says Caravantes. "It is not simply a subsidy auction."

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