Tempered post-election optimism with Spanish 'Green New Deal' hopes

The renewables sector breathed a tentative sigh of relief following the victory of the socialist PSOE party in Spain's latest general election.

Spanish prime minister Pedro Sanchez celebrates the election results (pic: Pedro Sanchez / Twitter)

The PSOE, already in government since June 2018, remained the largest party in Parliament, albeit without an absolute majority securing 123 seats of a possible 350.

It included its version of a "Green New Deal" in its manifesto, which was largely based on the ambitious €236 billion National Energy and Climate Plan (NECP), published in February.

The plan — authored by energy transition minister Teresa Ribera — targets 50.3GW of cumulative wind capacity to meet 34% of electricity demand by 2030; up from 23.4GW and 19% today.

National wind association AEE, while wholeheartedly supporting the NECP, is wary of pinning its colours to any political flag and declined to offer a direct opinion on the electoral result.

However, a leading AEE member did confide that "much depends on [prime minister Pedro] Sanchez’s main eventual coalition partner, though both [options] bring a degree of uncertainty; never a good thing for investors".

Possible partners

Both coalition candidates are staunchly pro-renewables," he said, "and there is no doubt about the PSOE’s vigorous renewables commitment."

But a pact with centre-right party Ciudadanos, which won 57 seats, would be "unpopular" with Sanchez’s support base, potentially "debilitating" the government.

While, a deal with the left-wing Unidos Podemos (42 seats), he added, would heighten the chances of increased taxation "impacting negatively on financial markets and possibly on project finance".

A partnership with Podemos would also require support from regional parties to create a working majority, adding to the complexity.

In any case, a coalition deal will not be completed before the municipal, regional and provincial elections, all set for 26 May.

The stock market reaction was also lukewarm.

Multinational turbine manfuacturer Siemens Gamesa saw its stock value rise just 0.3% the following day.

Greater enthusiasm was shown for pure local market players, such as renewable energy trader-provider Audax, which showed a 20% hike.

Sunny uplands 

One patently clear positive signal for wind is that the election saw the crumbling of the renewables-sceptical rightwing Peoples’ Party (PP), from 137 seats in 2016 to 66.

Spain’s once roaring wind market had crawled to all but a halt during the PP’s consecutive terms in office, 2011-2018.

During that time, the PP made retroactive cuts to previously state-guaranteed subsidies; now the subject of 35 international arbitration cases against the Spanish state.

If Sanchez and Ribera remain true to their Green New Deal, those dark days for Spanish wind are over.