A grand scale renewables strategy -- No direct funding but a target for 9000 MW of wind

Spain's new renewable energy development strategy, the Plan de Fomento a las Energ’as Renovables, is being hailed as a "step in the right direction" by wind advocates. Although wind will not directly receive any of the ESP 1.6 trillion (EUR 9.6 billion) in funds the government intends to leverage for the program's first stage up to 2006, various sums are earmarked for renewables research and development (R&D) and -- importantly -- for infrastructure improvements.

For R&D, ESP 5000 million will hopefully be redirected from existing public support programs into a new renewables fund, the Programa de Innovaci—n Tecnol—gica de Energ’as Renovables (PITER). Of this, ESP 800 million is planned for programs to reduce the cost of wind, grid analysis and monitoring and the formation of a central body for standardisation of wind turbines and components.

For infrastructure, the plan concentrates on large scale grid improvement and extension, which is referred to as "essential to medium and long term development in the wind power sector." Lack of grid lines and transmission facilities is a major barrier to further wind development in many regions. Funding sources for this are not specified, although the plan refers to increased pressure on an EU regional development fund, together with contributions from the Spanish industry ministry and grid owner Red Eléctrica de España.

Indeed, it is far from clear how the EUR 9.6 billion will arrive on the table. According to the plan, 69.5% will come via "project finance, investment funds, capital risk brokers, futures' credits, and guaranteed bond issues" among other difficult-to-calculate sources; 17.4% is theoretically to come from "internal" or "own" resources, that is from the developers; the remainder consists of reshuffling existing funds, such as the EU development fund.

The strategy, drawn up by Spain's renewable energy agency, Instuto para la Diversificati—n y Ahorro de la Energ’a (IDAE), was approved by the cabinet in late December (Windpower Monthly, February 2000). The 260 page document became available for public perusal last month. Previously established targets for wind are kept high, corresponding with the Spanish government's commitment to achieve the EU's target for renewables to meet 12% of energy consumption by 2010. Wind is to contribute 8974 MW.

policy harmonisation

The reaction of Spanish renewables group Asociaci—n de Pequeños Productores y Autogeneradores (APPA) to the plan is neither one of surprise nor disappointment. APPA, to which most wind developers in Spain belong, has 13 years of experience in renewables and was invited to consult on the plan's content. It had submitted 12 proposals for wind and small hydro; eight of them were incorporated in the plan, says the group's Manuel Bustos.

APPA welcomes the plan's pledge to promote education and training for renewables technologies as well as to harmonise regional environmental policies. The plan proposes allowing developers complete tax write-offs on any money paid to local authorities as part of the site permitting process. In a practice which is becoming rife in areas deluged with wind plant permit applications, developers pay a special tax, or offer royalties from future wind farm earnings, to the local authority. The plan suggests that royalties be limited to the equivalent of double the annual business tax that applies to a specific wind plant.

Premium payments for renewables output are seen as "essential," a statement APPA welcomes. The sector is still smarting following the government's 5.48% reduction in the wind tariff the day after passing the support plan (Windpower Monthly, February 2000). APPA believes the premium tariff -- in Spain set at 80-90% of the average consumer price of electricity -- to be the mainstay of wind's success in Spain, Denmark and Germany.

Bustos says the plan requires "a slightly additional push from renewables in order to reach the [12%] target," due to an unexpected upturn in consumption. He stresses that the electricity law passed in 1997 stipulates that "objectives defined by the Plan de Fomento will be taken into account in setting the premium." APPA believes the tariff is thus well set to remain closer to its 90% ceiling rather than its 80% floor.

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