Spain - Iberia's burst bubble shows no sign of life

SPAIN: Deep austerity has slowed Spain's previously soaring wind market to a crawl.

Google Translate

New capacity in 2014 is expected to be even lower than the 174MW that the country installed in 2013, according to national wind association AEE. Spain's performance compares dismally with its annual new capacity average of 1.47GW between 1998 and 2012, and especially with the 3.5GW peak in 2007.

But wind, with nearly 23GW online, was Spain's top electricity generator in 2013 — a first for wind power anywhere — covering 20.9% of demand (246.17TWh), up from 17.4% in 2012. But last year, developers in Spain renounced license allocations totalling 928MW from the central government's last wind-power quota, issued in 2012, claiming new regulations made projects financially unviable. Prospects for the remaining 177MW of the quota are grim, with the country's right-wing government currently consulting on a draconian pay mechanism proposal for renewables.

Under the proposal, new projects must compete for as-yet unscheduled government calls for new wind capacity. "Nobody knows if or when calls will be made," says AEE's Heikki Willstedt. He doubts there will be much interest anyway, with companies forced to auction downwardly from a life-cycle profit of just 7.5%. "Private PPAs are the only other option," he adds.

European wind association EWEA says the regulation will crush Spain's market, "making it very difficult" for the country to reach its 2020 EU wind target of 35.75GW.

The proposal strips all the wind capacity that went online before 2005 (more than 8GW or 37% of Spain's total) of feed-in tariffs and production incentives.

The pay mechanism's cut-off point is a 7.5% pre-tax profit across a wind farm's life cycle. All the capacity installed before 2005 has already reached that mark and will now receive the going electricity market rate only. For remaining plants, the older they are the less they will be paid for power. AEE's main hope now is that a change of government at next year's general election may bring a change of direction in renewable energy policy.

Current political backdrop Spain's right-wing majority People's Party government is intent on austerity, and is ideologically and personally cosy with gas and nuclear lobbies. It has maintained a moratorium on new wind capacity since 2012 and passed a series of retroactive regulations damaging profits for existing capacity

High point of 2013 Spanish wind emerges as the biggest single generator for the year, an annual first for wind power in any country

Low point New energy law passed in June, retroactively stripping wind of its 20-year feed-in tariff

Key influencer Alberto Nadal, feared by the sector even before becoming Spain's secretary of state for energy. Understood to be the real architect of a series of regulations strangling renewables

Have you registered with us yet?

Register now to enjoy more articles
and free email bulletins.

Sign up now
Already registered?
Sign in