In January, Spain's new conservative government imposed a moratorium on power sale subsidies for renewables commissioned after the end of 2012. This temporary but indefinite measure has elicited fury from Spain's renewables industries. If the moratorium is not lifted, Spain's wind industry stands to lose 30,000 more jobs, in addition to the 10,000 already lost since 2009, argues national wind association, Asociacion Empresarial Eolica (AEE).
Ostensibly, the moratorium aims to prevent production incentives for renewables from exacerbating a EUR24 billion electricity-sector deficit while its finances are restructured by the government. The deficit has accrued since 1998, when an anti-inflation law prevented electricity prices from rising above 2%, even if billing fell below cost - as has been the case.
The subsidy freeze applies to all renewables projects not already on the national renewables register. Existing online capacity is not affected. The register, created in 2009, licenses and schedules new project commissioning to the end of the year, but offers no provision for projects after that. AEE says the total wind capacity left to build on the register is 1,903MW, but it estimates that 970MW cannot be completed "for reasons outside developers' control, such as delays in power-line planning or administrative hold ups". Anything not connected before 1 January 2013 loses eligibility to a 20-year production incentive.
Despite the moratorium decree, its author, industry minister Jose Manuel Soria, has promised to honour Spain's binding renewables objectives, as set out in the national renewable-energy action plan. The plan foresees renewables accounting for 20% of the country's energy needs and 35-39% of its electricity consumption by 2020. It also includes a target of 35.75GW installed wind capacity, up from 21.67GW at the end of 2011.
Soria has failed to explain how he will ensure the plan's targets are met, prompting accusations that he is merely paying lip service to renewables. Suspicions have been further fuelled by his decision to uphold subsidies for power produced by national coal, which he says must be protected "at all cost", despite a 30.4% rise in Spain's electricity sector CO2 emissions in 2011.
Spain already has a more-than-acceptable level of clean installed power, according to Soria, and is "eight years ahead of most European countries". Indeed, Spain produced 32% of its electricity from renewables in 2011, half from wind. Soria has also branded wind energy as "the most expensive" form of electricity generation. The wind industry fears Soria will use the fact that the country is close to the lower end of the 35-39% target as justification for blocking growth.
The moratorium is the most drastic in a series of obstacles that the Spanish wind industry has faced since 2009, provoking job losses. The former socialist government failed to produce a new pay mechanism for wind power to replace the existing model, which expires at the end of this year. Accordingly, for a long time, banks have not financed any new projects, says AEE's policy director, Heikki Willstedt.
The result is reflected in Spain's 2011 wind sector figures. True, 1050MW of new capacity made the country the world's seventh largest market last year. Yet this marks Spain's lowest-ever annual growth and a far cry from the 3.5GW installed in 2007. Only 10% of equipment sold by the Spanish industry in 2011 went to the home market, according to AEE, and factory closures and layoffs are gathering pace.
AEE continues to seek a negotiated route out of the moratorium. However, Soria has not yet agreed to talks. Other lobbyists are preparing to use the courts. Spain's Renewable Energy Foundation, together with Greenpeace and the country's top trade union, Comisiones Obreras, are among a score of organisations that have united to attack the moratorium. Spain's 1997 electricity-sector law states the government must provide "reasonable profitability" for renewables to ensure national and EU objectives are met. If Soria refuses to offer a clearer commitment to wind, the courts will be the sector's main hope.
