Battle lines drawn over new rates -- Spain's wind support saga

A year past deadline, Spain's state energy secretary Jose Folgado says he has finalised his proposal for a new "simple and practical" support model for wind and other renewables. Before any official announcement, however, the proposal must run the gauntlet of the Comisión Nacional de Energía (CNE) and the cabinet. Fears are that the CNE, together with the technology ministry's Dirección General de Energía, will pull the rug out from Folgado's plan.

The word is that Folgado's proposal retains the current production incentive, but fixes the support level for eight years instead of the current four, adding much needed market stability. Indications from energy department boss Carmen Becerril, however, suggest she is heeding the ill-supported claims of power sector chiefs that rapid development of wind power will destabilise Spain's electricity supply (page 47). To slow growth, amending support regulations is an obvious option for Becerril.

Under Spain's 1997 Electricity Sector Law, payment for renewables generation must be 80-90% of the electricity sales price nationwide. The exact percentage for each technology is revised every four years, with annual adjustments to the rate to achieve the percentage target. The industry fear now is that Becerril is thinking of lowering the wind target to be closer to 80% than 90% of the electricity price in Spain.

Meanwhile, the CNE says it has presented an "ambitious and complex" proposal for a radical change in the payback system, although this has not been publicly released. CNE's Pablo Blanco argues that wind no longer needs high subsidies. At a recent wind seminar in Toledo on improved scheduling of wind on the grid, he said he favours "drawing wind closer to market conditions."

Both Spain's national renewables associations Asociación de Productores de Energías Renovables (APPA) and wind business platform, Plataforma Eólica Empresarial (PEE), would rather see a considered decision on the support level than a quick one. APPA's Manuel de Delás says a support level set for eight years is acceptable, while PEE wants returns guaranteed for 15 years. PEE argues that adding certainty would reduce the cost of risk investment by up to EUR 157 million annually.

Not even Folgado expects the new support model to appear before the year's end.