WindEurope slams planned Spanish levy on wind farms

Making wind farms connected to the grid before 2005 pay up contradicts purpose of carbon tax and will put off investors, trade body warns

Wind farms connected to the grid before 2005 could be affected by the levy (pic credit: Vestas)

WindEurope has dismissed Spain’s plans to dock revenue from old wind farms to reduce energy costs for consumers as “plain wrong”.

The Spanish government plans to impose a levy on zero-carbon generation capacity connected to the grid before 2005.

This would include older wind farms and hydro plants, as well as all nuclear plants, which the government argues have benefitted from power prices inflated by carbon costs.

The levy would be calculated by Spain’s National Commission of Markets and Competition, the CNMC, and would be the equivalent to the carbon tax paid by a similar-sized power plant, the government explained.

The vast majority (90%) of these payments — to be collected quarterly by the CNMC — would be used to finance renewable energy subsidies, while the 10% remainder would help fight energy poverty under government plans.

This would save domestic consumers 4.8% on their bills and industrial groups 1.5% on their energy costs, it believes.

The measure will affect about 85TWh of power generation annually, it is estimated. While the heaviest burden (67% of the 85TWh impacted) would fall on nuclear generation hydro (29%) and wind (less than (5%) plants would also be affected.

The Spanish government reiterated that these plans will not apply to new projects, and so argues that the investment signal to new entrants “remains intact”.

WindEurope disagrees. “Moving goalposts always risks undermining investment," the trade body said.

“Wind and solar are the technologies we need to be investing in, to deliver the energy transition. So a measure such as this, which risks undermining investment in wind, is plain wrong.”

The Spanish government has opened the consultation process for the draft legislation, with a 10 June deadline for responses.

It justified the move by pointing to the significant changes in CO2 prices since emissions trading began on 1 January 2005. In recent weeks, CO2 prices in European markets have risen to more than €50/tonne – up 150% from a year ago. This trend is expected to continue, the Spanish government explained. 

However, WindEurope noted that wholesale power price dynamics are very complex and cannot be attributed exclusively to rising carbon prices.

WindEurope added: “CO2 pricing is meant to support the expansion of wind and solar. Imposing such a measure on wind energy runs counter to logic. And it runs counter to a core principle of EU climate and energy policy. 

“It contradicts how CO2 emissions trading is meant to work and how it’s meant to interact with energy markets.”