Galicia building plan delayed by legal row

SPAIN: A row over Spain's biggest wind power construction programme continues to rage unabated, with industry fears mounting that work will never get fully under way.

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Galicia's supreme court has recently ruled that the allocation of building rights by the previous regional government for 2,290MW of wind capacity in 2008 - subsequently revoked by the current government - was "completely legal".

The serving conservative regional government revoked the licences on the grounds that the 2008 allocation was illegal and instead auctioned off rights to build 2,325MW in November. Opposition parties accuse the regional government of scrapping the 2008 allocation for political reasons.

"The public sector was going to be an important participant," and "big companies did not do well out of it", notes Fernando Balanco, former regional industry minister.

Javier Guerra, who now holds Balanco's post, insists that the current government's plan will proceed as planned, dismissing the court's ruling as having "no practical effect". The 2008 allocation was revoked by a parliamentary majority, he says.

But Guerra's bullishness may be short-lived. The regional government faces appeals from 30 bidders dissatisfied with the way its competitive tender process for capacity was conducted.

In revoking licences awarded in what has now been ruled a valid tendering process held in 2008, the government's behaviour has been "very damaging to the industry, increasing perceived risks and raising the financial costs lending institutions will demand from developers", according to Heikki Willstedt, director of energy policy at Spanish wind industry association Asociacion Empresarial Eolica (AEE).

"Who can now guarantee that, after the next regional election, the present allocation will not also be revoked even before the first megawatt is installed?" he says.

Finance delays

Compounding the problem is the fact that successful bidders are not able to arrange project-finance packages until Spain's central government has set nationally guaranteed wind power prices for 2013 onwards, as Guerra himself acknowledges. Willstedt warns that, with the rules of November's auction having required firms to "make inflated and unrealistic bids", it is possible that 50% of the allocated capacity in Galicia will never be built.

Galicia is not the only Spanish region facing problems. The Supreme Court has also recently blocked allocations for 769MW in wind capacity in the Catalan region. Catalan's regional government says it may redraft its map of projected wind farms but maintains the aim of having 3,500MW of new capacity by 2015.

Meanwhile, competitive tenders to build a total 3,000MW in new wind capacity in a further three autonomous regions - Cantabria, Aragon and the Canary Islands - are also facing problems, says the AEE.

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