Government deals new blow to wind

PORTUGAL: The Portuguese government has dealt the wind sector another blow by announcing cuts in tariffs for existing wind farms totalling EUR100-200 million up to 2020.

Growth in capacity has already practically ground to a halt since January following a moratorium on feed-in tariffs (FITs) for new projects.

Wind and other renewable-energy producers will be offered "some kind of non-financial incentives" to join a voluntary scheme to lower FITs, a Portuguese economy ministry source told Windpower Monthly.

The initiative is part of a reduction in price support for all forms of electricity generation, which the government claims is required to avoid a 30% rise in electricity bills and to reduce the cost of electricity generation by EUR1.8 billion in 2020.

The government has also indicated it wants to reduce 2020 targets for wind-power capacity in response to falling electricity demand due to the economic crisis. A spokesman for the economy ministry said that a draft revision of the National Renewable Energy Action Plan (NREAP) would be published in the last week of May. A previous draft put out in April, with sharply lower targets for wind-power capacity, was mysteriously withdrawn.

Regional depression

The new cost-cutting approach to renewables by both the Portuguese and Spanish governments could cut annual build in Iberia to just 740MW a year up to 2016, according to research by Make Consulting published last month.

Basque Country-based Gamesa has already slashed its workforce and in May threatened to halve its Spanish turbine production capacity by 2013 unless the government unfreezes price support for new wind production (see page 18).

The Make report warns that specialist manufacturers who established facilities in the region will be hard-pressed to diversify into other industries at a time of economic crisis. But moving into new international markets may not be easy either. Their weakened financial position has forced some manufacturers to focus on their existing facilities rather than invest in emerging markets.

The report identifies Enercon's plant in Viana do Castelo, Portugal, as particularly vulnerable, but warns that Alstom, Acciona and Gamesa will also face problems because of their reliance on factories in Spain.

In April, Spanish wind generated a record 5,362GWh - more than a quarter of total electricity production, while in Portugal wind generation supplied over 18% of electricity demand. In both countries the wind industry has contributed significantly to GDP over the past decade via employment and investment.

"For some reason, the wind industry is viewed as a nuisance, as an industry which needs subsidies," said Heikki Willstedt, energy policy director at Spanish wind energy association AEE, in response to the Spanish government's reversal of policy. Government cuts project a saving of EUR8-EUR20 million in FITs, but risk depriving the economy of more than EUR1 billion in investment, he added.

A spokesman for the Portuguese economy ministry insisted the government was proud of its wind sector but added: "Our previous path was unsustainable in terms of the cost of electricity production."

However, Anibal Fernandes, president of the ENEOP wind-power consortium tasked to build 1.2GW of projects in Portugal, called government policy irrational. "Renewables are an essential part of a sustainable economy," he said. "Wind technology is very competitive, with FITs for ENEOP wind farms among the lowest in Europe."

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