The decree has entered the statute books and is already in force. It introduces a centralised register for all renewables projects not already under construction, making it part of a huge waiting list for permits. Industry minister Miguel Sebastian, the law's main architect, sees it as a tool for good budget planning, but Spain's regions, which have a high level of devolved government, say it represents central government interference in their affairs. Several regard their local wind industries as major contributors to the regional economy. The law "slams the brakes on renewables development," says Apecyl, the renewables association for Castile and León, Spain's leading wind region.
Sebastian intends for the law to prevent regions with more than 3 GW of wind development in the works, such as Galicia, Castile and León, Andalucía and Castile-La Mancha, from pushing wind power capacity past the national target for the end of next year, arguing that the country cannot afford it. Wind generation currently receives a production incentive of EUR 30/MWh in addition to the wholesale price for electricity. Over 2008, payments for wind power exceeded EUR 1.2 billion, contributing to an electricity sector deficit of EUR 14 billion. Sebastian calls reducing that deficit a top priority and a main reason for pushing through the emergency decree.
Currently, Spain is the second largest wind market in Europe after Germany and the fourth largest in the world after the US and China. The wind industry added 1600 MW last year and expects to do the same this year and next. What had been expected from government was official sanction of a new goal of 29 GW by 2016, rather than an indication that market growth is to be capped. Late last month, however, Sebastian indicated he was prepared for dialogue on targets and conditions beyond 2010, says Jose Donoso of the national wind association, Asociación Empresarial Eólica (AEE). Until that dialogue is complete, the Spanish market hangs in limbo.
AEE says rules governing the new register are excessively demanding. Projects with all permits in place but not under construction are given highest priority. They had 60 days from May 7 to pony up a deposit of EUR 20 a kilowatt to enter the register. Any developer failing to build the project loses the deposit. Until the 20.15 GW cap is reached, projects will enter the register on a first come, first served basis.
Before they are eligible for the register, projects must have a local authority building permit and regional government authorisation, as well as a grid connection permit, proof of finance covering at least 50% of total investment and proof of a turbine contract covering at least 50% of capacity to be installed.
Small developers will struggle to meet the requirements and even larger companies will be hard pressed, says AEE. It says the only positive aspect of the law is that after registering, projects have as long as three years to connect to the grid before losing eligibility to the existing production incentive, meaning they need not rush to meet the 2010 deadline. Whether any incentive payment will remain post 2010 is unknown.
The Spanish wind industry fears that it is next in line for the kind of austerity measures applied to the country's solar industry. Spain's photovoltaic market became the world's largest last year when it connected 2.5 GW of new capacity. But in October, the minister capped new PV capacity at 500 MW annually. The PV industry estimates some 20,000 jobs have disappeared since. AEE fears annual caps may be placed on the wind market.
Meantime, it hopes the "emergency" nature of the decree is a temporary symptom of the global economic crisis. The organisation is demanding clear signals of support for wind to reassure investors about the horizon beyond 2010. That, it says, would be in line with Prime Minister José Luis Rodríguez Zapatero's recent promise to use the Spanish presidency of the EU during the first half of 2010 to help realise Europe's target of raising the share of renewables in energy use to 20% by 2020. Zapatero has also promised a renewable energy law in Spain in accordance with that directive. For Spain to meet the target, AEE says 40 GW of wind power will be necessary, a goal it wants to see included in Zapatero's promised law.