Spain - Uncertain future for wind as moratorium is enacted

SPAIN: Following its four-year demise, Spain's once roaring wind market has now ground to a halt.

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On 1 January the government's indefinite moratorium on new renewables construction came into effect, ostensibly to cut a EUR 24 billion deficit across the electricity system.

The market's main hope of activity in 2013 rests almost entirely on government indications that it might stretch the deadline on 600MW of delayed projects, says Heikki Willstedt, policy director at Spanish wind association AEE. But beyond that there is a void, he says.

Backed by trade union figures, AEE points out that 14,300 wind sector jobs have been lost, from 40,000 that existed in 2009 when the Spanish wind market demise began. In that year, the then socialist PSOE government clamped a 6.4GW quota on wind permits to the end of 2012. This was extended in January 2011 by 600MW.

spain capacity pieJust over 1GW of new capacity was connected in 2012 according to the Global Wind Energy Council. But that merely marked the end of the 2009 quota. "The party's over," says Eduard Sala de Vedruna of energy consultants IHS Emerging Energy Research (EER).

The overwhelming view among AEE members is that the government will not introduce any price support mechanism to replace what has expired. Furthermore, AEE estimates an additional and "prohibitive" 15% cost burden on wind operators starting in 2013.

A law passed in November 2012 clamps a new tax on all electricity generation income, set at 7%. AEE says the tax will cost existing wind capacity EUR300 million a year, in addition to new wind power taxes across Spain's leading regions. Combined with the expiry of compensation to wind producers for the obligatory incorporation of grid integration technologies at the end of 2012 and revision to the price support mechanism for wind (see page 16), existing capacity will lose EUR 600 million in 2013 alone, AEE estimates.

Nevertheless, AEE expects domestic electricity prices to soar in Spain in coming years. The association is studying the minimum future wholesale price that will enable new wind to survive on the market, either without price support or with a minimum electricity price guarantee as a failsafe to attract investors.

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