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Europe: Spain promises big new wind plan - Reassurances from energy secretary

A new Renewable Energy Plan for Spain is on the way and there is no intention to stop wind power's growth, says state energy secretary Pedro Marin. His reassurances come after the government passed an emergency decree in May to stop wind power capacity spiralling above the existing plan's 20 GW target for end 2010.

"We are now working on the new regulation, aimed at guaranteeing continuous wind power growth into the future," said Marin at last month's Spanish wind industry conference hosted by the Asociacion Empresarial Eolica (AEE). "The administration is going to work to ensure Spain's continued position among global wind power leaders."

Marin's words lie in stark contrast to his government's actions. The emergency decree, now in effect, requires all wind projects not under construction to enter a central register, where they must wait for permits to qualify for wind power's EUR30/MWh production incentive. In effect, central government is seizing control of wind development from Spain's regions. With payments for wind power contributing EUR1.2 billion to the Spanish electricity sector's EUR14 billion deficit last year, industry minister Miguel Sebastian has had enough (Windpower Monthly, June 2009). The regions have long vied with one another for the jobs and economic prosperity brought to depressed outlying areas by the wind industry.

Fully committed

Nonetheless, Marin says Spain is fully committed to the EU law for 20% primary energy from renewables by 2020. He repeats his government's acknowledgement that wind capacity must reach 40-45 GW for Spain to fulfil its role - and he promises that, after a year of failing to consult the wind industry, the government will reopen a dialogue. Spanish wind power currently stands at about 17 GW.

The wind industry remains unconvinced and says that all development for post-2010 projects is at a standstill. "We need concrete actions as soon as possible to keep investor and financial interests high and avoid market paralysis," says AEE's Jose Donoso. The new Renewable Energy Plan and its accompanying law, however, may not see the light of day for another year, fears Donoso. They will form part of the "national action plan" that Spain, along with all EU member states, is required to submit to the European Commission, but it has until June 2010 to do so.

Meantime, potential wind investors are in the dark about what price they can expect for their electricity. From Iberdrola Renovables, Estanislao Rey Baltar sees wind becoming competitive with gas-fired generation by 2015. "That won't happen without continued support and clear signals to investors," says Donoso. "Sure, we need to reduce costs, which is happening now, but I'm not convinced we can take on our 2020 objective without a safety net." The sector needs "Solid, long-term guarantees and we hope the new dialogue with government will help provide that."

Credit woes

The government's action comes at a particularly tough time for the Spanish wind industry, far from untouched by the global financial mess. "Spain now has just six or seven financial entities still offering project finance, compared to the 40 or 50 before the financial crisis," according to Carlos Rubio of developer N+1 Eolia.

Hollow laughs from among the 150 conference delegates accompanied a statement by Jesus Losa of bank La Caixa that the lenders that remain have ample liquidity and are still keen to finance wind projects. Five developers privately spoke of waiting for finance for mature projects for more than half a year.

The smaller number of willing lenders has shifted power to the banks still in the ring. Developers described overly exacting demands on due diligence and financial terms. Donoso calls for the government to open credit facilities to projects ready to build.

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