New proposal for wind tariff reform

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The saga over changes to the system for purchasing wind power in Spain continues. Alarmed at "excess profits" being made by wind plant owners, the government has been threatening to drastically reduce pay rates for nearly a year. Early last month, state energy secretary Ignasi Nieto presented a long-awaited proposal for cabinet approval. But such was the disquiet of the wind industry that government has delayed further action until May 11 to allow for more talks. Nieto's proposal sticks to a gentleman's agreement made with the wind lobby in March (Windpower Monthly, April 2007), but for one significant change. Instead of linking purchase prices to the inflation index, minus 1% of the inflation rate, the government reserves the right to make discretionary changes to the rate. In effect this removes the fixed price security for power purchase contracts that investors demand, once again making them nervous about the stability of returns in the Spanish wind market. Under Nieto's proposal, the wind production subsidy remains at the existing EUR 35/MWh to 2012, but drops to EUR 30/MWh for subsequent wind plant. Late last year he offered just EUR 17.4/MWh, starting immediately for both future and existing wind power output.

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