Fuzzy but positive signals in Spain

Renewable energy has entered the arena of political, economic and social debate to a degree never before witnessed in Spain. Much of the new found interest in renewables -- and in wind and biomass in particular -- can perhaps be put down to no more than pre-electoral headline grabbing. Spain goes to the polls in March. But with one side promising to end nuclear power generation, the other side promising a massive increase in research and development spending -- and the government leaping to pledge a positive decision on Spain's long awaited renewables strategy this month, the portents appear good.

Spain could be the next country in Europe to prove that where nuclear power is in decline, a potential market for wind power is on the rise, if Joaquin Almunia, leader of the labour opposition party PSOE, gets his way. He has pronounced that he will close all nine of Spain's nuclear stations by 2015 -- if his party wins in March, that is.

The criterion for closure is based on the 25 year amortisation period of the nuclear plants, as opposed to the 40 year "useful life" criterion insisted upon by the utilities. Indeed, Almunia promises the first two closures, Zorita and Garona, which have already paid for themselves, within the first year of his mandate. "I'm not looking to be original," says Almunia. "The Germans, Swedes and Japanese are all making decisions on this issue in their commitment to a cleaner, safer and more sustainable world."

Pro-nuclear lobbies in Spain, especially the Foro de la Industria Nuclear (FIN), together with voices from the ruling Conservative party, the Partido Popular, accuse Almunia of electioneering and criticise his proposed alternatives to nuclear. FIN maintains that the principle alternatives indicated by Almunia, combined cycle gas and oil fired generation, could not guarantee adequate supplies. Furthermore, it maintains that the combined cycle option must first fill the gap left by reduced coal fired generation -- part of Spain's post-Kyoto contribution to reducing emissions -- which, according to its estimates, will take ten years.

Official figures for the contribution of non-hydro renewables put their contribution to Spain's power mix at 6.3%. FIN, however, states: "It is impossible for renewable sources to substitute nuclear energy within a period of 15 years. Up to now it only covers between one and two per cent of power consumed in Spain, while nuclear energy represents 30%." FIN further points out that if the premium rate for renewables power is maintained at ESP 9.5/ kWh (EUR 0.054/kWh) -- and ESP 11.02/kWh (EUR 0.066) for wind -- Almunia's plans could double the consumer cost of electricity in Spain, ESP 6.0/kWh (EUR 0.036/kWh).

Almunia insists, though, that the nuclear shutdown can be brought about without incurring any extra cost. Apart from promising that renewables will contribute a 15% share of the power mix by 2010, PSOE says a more rational plan for dispatching electricity could fill a large part of the gap. Almunia, backed by Greenpeace and other ecology groups, insists that Spain's installed capacity exceeds demand by more than 25% during peak hours. Furthermore, while nuclear plants now work at near 100% of their capacity, combined cycle plants often remain on stand-by, despite the fact that they are 50% more efficient.

All's well, or is it?

A second message in support of renewables was not without ambiguity. It followed a report in Spain's largest daily, El Pa’s, headlined: "Spanish government blocks renewable energy program fearing increase in consumer price index." The story fell into the five month policy hiatus brought about by the industry ministry submitting its renewables support program, the Plan de Fomento de las Energias Renovables to the economics ministry for approval.

Drawn up by Spain's renewable energy agency, Instituto para la Diversificaci—n y Ahorro de la Energ’a (IDAE), in conjunction with regional governments and companies in the renewables sector, the plan has been waiting for a rubber stamp since May. The El Pa’s report confirmed the worst fears of the renewables industry.

But two days later the newspaper corrected its initial interpretation of the government's foot dragging under the headline: "Renewable energy program to be approved before end of the year." In this article, and in further declarations, Carmen Becerril, director of IDAE, says there is no talk of tampering with the pricing mechanism for renewables, which is established by law, nor with the premium rate. What is being considered, though, is a reduction of incentives deemed by the economics ministry to be excessive, such as installation subsidies totalling ESP 279,913 million (EUR 1.7 million), and tax deductions amounting to ESP 164,273 million (EUR 987,300). Becerril is confident the program will be approved this month.

The future of wind and other renewables has also been the subject of speculation following an address by Prime Minister Jose Maria Aznar to the business community in Valencia. In it, he divulged the government's research and development (R&D) program for the next four years. In order to achieve the aim of putting Spain among the world's most developed countries, public spending on R&D within the next few years is to increase by between 6% and 8% to reach 1.3% of GDP by 2003.

For the time being policy details regarding wind's share of the R&D budget are in the hands of Spain's renewables research organisation CIEMAT. CIEMAT's Felix Avia promises he will shortly be divulging the main aspects of the program's application to wind-which he claims to be broad sweeping and progressive.