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Spain

Spain

Record earnings scored in Spain

Wind plant operators who have chosen to trade on Spain's open electricity market are scoring record earnings due to rising prices, despite the year kicking off with a 5.5% average cut in wind's premium, which is paid on top of the price achievable on the market.

After adding wind's premium of ESP 4.79/kWh, payment to wind producers in March reached an all time record of ESP 12.09/kWh (EUR 0.073). Even with 1999's higher wind premium of ESP 5.26/kWh, the best earnings last year were ESP 11.46/kWh in February, when the pool price hit an annual peak of ESP 6.2. So far this year, price in the electricity trading pool has risen from ESP 6.4 in January to ESP 6.8 in February and reached as high as ESP 7.3 in March.

The national renewables producers' association, Asociación de Pequeños Productores y Autogeneradores (APPA), remains vehemently opposed to the cut in the wind premium (Windpower Monthly, February 2000). It says the rise in pool price is due to two short-lived factors: recently inflated fuel prices and the abnormally low rainfall in Spain over the last two years, cutting the country's hydro production. When the pool price returns to normal, says APPA's Manuel Bustos, the association's concerns about the cuts will prove to be well founded. Meantime, however, Spain is well on the way to achieving its 1000 MW goal for installed wind capacity -- with 716 MW already under construction.

Bustos also points out that wind plant operators who chose not to risk the market and instead elected for the alternative fixed wind tariff are still hit by the cut, which has reduced the tariff from ESP 11.02/kWh in 1999 to ESP 10.42/kWh (EUR 0.0626/kWh) this year.

Annual revision

The premium mechanism requires an annual revision of the Renewable Energy Feed-In Tariff (REFIT) to make sure it tracks market prices. At the beginning of the year, the energy industry estimated a 5.48% reduction was needed.

Since then a general election -- reinstalling the Conservative government -- has come and gone with no further explanation for the estimate. The wind industry is still waiting to hear why the cut was nearly two points higher than that suggested by the Comisión Nacional del Sistema Eléctrico (CNSE). The CNSE was set up to process information on all national electricity producers following the liberalisation of the Spanish electricity market in 1997. It calculated the average reduction at 3.5% and suggested this same figure be applied to the year's REFIT adjustments.

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