Spain gets it together

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With construction completed or ongoing on 2500 MW of new wind plant this year, Spain is performing like never before. It is even vying with Germany as the world's most dynamic wind market for 2004. But can it keep it up? Not for long, according to the two-year-old national energy plan. It clamps a 13,000 MW cap on wind capacity for 2011 -- in a country that has 7000 MW operating today.

Spain, however, has a new government. And the Partido Socialista Obrero de España (PSOE) is determined to boost renewables, wind in particular. Its short track record looks promising so far -- the wind sector is buzzing over assurances from the energy efficiency agency that the cap will be raised to 20,000 MW. What's more, in its few months in power, PSOE has already shown strong green leadership. It has met the EU's requirement for a national allocation plan for greenhouse gas emissions, a prickly thorn the former Conservative government failed to grasp, and it has scrapped plans to channel river water from the wet north to the dry east, proposing an alternative for 11 desalination plants powered by wind, where possible. The measure has enraged the parched east coast, whose powerful regional governments intend to sue the government. But if PSOE can face up to George Bush and remove Spanish troops from Iraq, it can probably face down a few enraged politicians at home.

Driving PSOE's energy policy is its pledge to correct Spain's flagrant breach of its carbon emissions reduction commitment, while at the same time meeting an annual growth rate in electricity demand of 5-6%. Spain is also far from its target for 12% of primary energy to come from renewables by 2010. Wind is the only technology making significant steps towards it.

Behind the scenes, PSOE is laying the groundwork for its renewables agenda. The government has installed its own political heads in electricity and energy institutions, most significantly at the helm of the traditionally anti-wind national grid company, REE. It was a technical report from REE that convinced the former government that 13,000 MW was the maximum Spain could take. With a new friendlier leadership, REE has initiated an exercise with the wind industry to establish its true technical potential. Six months ago, the mere suggestion of such a combined effort would have met with a hollow laugh from REE, at best.

On the policy front, PSOE has been mindful of the importance of continuity. It has not tampered with a new wind market framework passed just before the previous government's demise. The new regulation provides wind plant operators with good economic reasons for abandoning guaranteed purchase prices in favour of entering the wholesale market. A number of wind operators are lining up to do just that, with utility Iberdrola -- with more wind capacity online than most of its competitors put together -- likely to lead the way. With wind power producers trading alongside their fossil fuel competitors, the argument that wind is an expensive addition kept alive on subsidised prices fizzles out. The wholesale market also requires producers to be vigilant with output forecasts, something that should help alleviate REE's fears about "unpredictable" wind supplies. The utility has been surprisingly slow to learn from overseas studies and its own experience that fluctuations in output from wind plant are nowhere near the problem it makes them out to be.

The push for more wind power from Spain's autonomous regional governments will put further pressure on REE to fully integrate wind. They see local wealth in the wind. In Navarra alone, its 700 MW has created 4000 jobs, while regions like Galicia, Castile & León and Valencia insist on local assembly and manufacture of turbines and components before granting development concessions. It is a command-and-control approach that may not always be efficient -- and gives rise to suspicions of bribes and back-handers -- but strong-arm regional government intervention is what kick-started Spain's wind boom in the late 1990s. It is an achievement they are proud of and they will compete hard among themselves to put up most megawatts.


The speed at which both transmission and distribution lines can be built will decide the rate of growth. Now that utility Iberdrola is a major wind player it is eager to build infrastructure in its regions of influence. Competing utility Endesa is less clearly committed and has long-since put up obstacles to new lines for wind in Catalonia. But as Spain's dirtiest power generator -- and faced with a national cap on CO2 emissions -- it needs more clean power in its portfolio. That is a strong incentive for building power lines for wind.

Lack of wires is not the only hurdle. Opposition from local environmentalists and neighbourhood action groups has been growing. Fortunately, broader pro-wind environmentalism is countering the trend. One major group, Ecologístas en Acción, is now defending a series of wind project plans, including 814 MW offshore in front of Spain's second most important bird reserve. National pride could also play an important part in stemming the tide of local opposition. PSOE's desalination project has put wind on the front pages of the mass media, awakening Spain to the fact that after Germany it leads the world in wind power. Most Spaniards do not know that. Welling national pride and the knowledge that wind brings wealth and jobs will play a vital role in deflating not-in-my-back-yard sentiments.

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