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Spain

Spain

Draft law causes widespread outrage -- Legal challenge possible

A torrent of criticism has come raining down on the Spanish government's draft regulation for offshore wind power development. With some 6500 MW of proposed projects waiting even for permission to install a wind measurement mast, the only good thing anyone in the Spanish wind sector has to say is that at least the industry ministry, which published the draft, is making an attempt to bring order to the quagmire that is the current planning process.

Under the draft rules, any proposed project must be subject to a public enquiry. Subsequently, even if the project looks reasonable, the site earmarked for development will be opened to public tender. While electricity regulator Comisión Nacional de Energía (CNE) approves of the approach, national wind group Asociación Empresarial Eólica (AEE) is less convinced. It points to the "singular lack of success" of offshore regulations in other countries "based on competitive tendering."

Economics

But it is two other proposals that have caused most discontent -- the draft's call for projects to propose a discount on established earnings for wind power production and the imposition of a 50 MW minimum capacity for offshore projects. "How can a regulation incite undercutting before the economics of a capital intensive project are seriously weighed?" asks AEE's Ramón Fiestas.

"At the initial stage, priority needs to go to developer solvency and experience, together with assessment of technical proposals for defining feasibility." CNE agrees: "Discount auctions," as applied in Ireland, France and UK, have not proven effective and, therefore, "make no sense," it says.

Furthermore, a 50 MW minimum size requirement automatically reduces the production subsidy available. The top rate of wind subsidy is only paid to wind stations with rated capacities up to 50 MW, which explains why most Spanish wind farms are officially rated at 49.5 MW, even though often grouped in complexes of 200 MW or more. These top earners receive the electricity pool price, plus a premium set at 50% of the national average electricity price to consumers. The premium for wind plant over 50 MW drops to 40%. CNE says it sees no sense in the proposal when offshore installed costs "can be double those of onshore wind farms."

Meanwhile, AEE is banking on a legal trump card if its hand is forced. Fiestas says he doubts the legality of retroactively applying the new regulation to projects long since in the planning processing, such as most of the 6500 MW already in the pipeline. While most developers seem to think him optimistic, believing their existing projects are the target of the new law, he argues that, technically, it can only apply to new projects.

Fiestas, however, is reluctant to revisit the bygone days when the industry engaged in intransigent legal nitpicking as a lobbying tool, regarding the strategy as a last resort. He would rather nurture the current political climate of support for renewables, he says. The fact that CNE agrees with AEE's main points of contention should strengthen his case.

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