Industry set to fight visual impact tax

SPAIN: Spain's wind industry is bracing itself for a legal battle after Castile-La Mancha became the second Spanish region to introduce a "visual impact levy" on project operators.

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"Such levies are unjustified and can only push up the electricity bill as well as discouraging investments in those regions applying them," says Alberto Cena of national wind association Asociacion Empresarial Eolica (AEE).

Taxing wind projects on the basis of visual impact is a growing, unfair and costly trend among some of the country's autonomous regions, it says. The northern region of Galicia introduced the first such tax two years ago, but Extremadura in the south-west and Castile and Leon, north of central Spain, are currently debating similar measures too.

The Castile-La Mancha tax was approved in March and is set to come into force by the end of this year. As with Galicia's tax, the levy charged is determined by the number of turbines rather than installed capacity.

The annual rate per set of turbines is EUR1,956 for projects comprising three to seven units of any size and EUR2,613 for those featuring 8-15. For projects using more than 15 machines EUR4,932 per unit is payable for turbines up to 1MW and EUR5,100 for turbines above 1 MW in capacity.

The levy is set to raise EUR15 million in its first year, says Maria Luisa Araujo, Castile-La Mancha's regional vice president. In Galicia it brings in about EUR20 million.

Araujo argues the mass deployment of turbines across the region warrants "social compensation". The levy is equivalent to just 1.6% of annual wind plant generation income in Castile-La Mancha, she adds, noting that no developers have scrapped project plans since the tax was announced.

Cena counters that wind operator margins are already tight. Landowners are negotiating tougher lease deals, he says, while available sites for future development have lower wind speeds and require significant investment in new interconnection power lines. He says AEE is considering taking legal action against the Castile-La Mancha levy, although this could delay projects. Ega, the regional wind association of Galicia, has so far held back from going to court for the same reason.

Another option may be to take advantage of a legal loophole in the 1997 electricity law, says AEE. A clause in the law allows the electricity regulator, if it chooses, to set grid toll fees to compensate for any differences in generation costs between one region and another. All consumers pay the fees via their electricity bills. Generators paying higher costs in any region - such as where the levy occurs - could recoup the difference from the toll fund at the end of the year. Application of the clause in this way would directly associate visual impact levies with increased electricity prices. But the clause has never been acted upon, so AEE faces an uphill struggle to get it implemented for the first time.

However, with other regions looking at introduction visual impact taxes on wind, Cena says something must be done.

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