Spanish regulations 'will paralyse wind energy sector'

SPAIN: Spain's proposed new rules on price support for wind-power generation will paralyse the sector, destroy thousands of jobs and prevent the country reaching its 2020 wind-power target, according to industry association AEE.

In September, the industry ministry referred draft legislation governing price support mechanisms for new capacity installed after 2012 to energy regulator Comisión Nacional de Energía, in advance of its formal approval by Spain’s council of state.

AEE has complained that the planned changes to premiums do not guarantee reasonable profitability for projects and has asked the government to reconsider its position "to prevent a de facto moratorium over the next few years".

The association highlights three aspects of the proposals it considers unacceptable. Most significantly, the ministry wants to introduce a variable tariff model for all new wind farms, under which premiums will fall if annual production quotas are exceeded. AEE believes this would leave investors unable to calculate profitability over the life cycle of a wind farm and shut off access to financing. In addition, premiums for new installations will only be payable for 12 years, down from 20 years Finally, premiums will only apply to the first 1,500 hours of annual operation and will no longer be inflation-proofed. Overall, the new rules represent a 40% cut in premiums for wind farms built after 2012 compared with current levels, AEE estimates.

AEE says the ministry has also ignored repeated requests for incentives to repower old installations, and for solutions to current projects bogged down by changes to grid infrastructure rules. The draft legislation projects that 1.4GW of wind-power capacity will be installed annually, enabling Spain to reach its 2020 renewable energies target of 35GW.
According to the ministry, the new tariff structure will achieve this by providing long-term stability and predictability for the sector while minimising the cost to consumers. The new rules will also reduce bureaucratic obstacles for project developers, the ministry claims.

The industry association had been pressing for the post-2012 regulations to be approved before Spain’s general election on 20 November. It warned in August that failure to do so could prolong the damaging loss of investor confidence in Spanish wind developments, which has been provoked by uncertainty over future price-support levels.

Turbine manufacturer Gamesa said recently it expects no domestic orders for the next two years. Company president Jorge Calvet said that the Spanish market has collapsed and blamed confused policy-making.

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