Attack on wind subsidies in Spain -- Calls for more efficiency and warnings of system imbalance

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More control of wind power development and an end to the fixed feed-in tariff to wind generators is being called for in Spain by the national energy board, Comisión Nacional de Energía (CNE). It is concerned that wind development is not happening efficiently -- meaning it is more costly than it need be -- and that the whole national power system could be destabilised. Growth of Spanish wind power, however, is no faster than planned for in the national renewables promotion strategy, the Plan de Fomento.

"There is a complete absence of any move towards a more efficient incorporation of wind power within the system," says the CNE's recently published report on Spain's Régimen Especial, the special electricity regime which includes renewables and cogeneration. CNE calculates Spain's installed wind capacity to have reached 2060 MW by the end of 2000 -- about 5% of national generating capacity -- and considers 10,000 MW for 2010 as feasible.

But CNE says that level of wind power penetration on the power system will make balancing production with demand difficult since wind power cannot be dispatched on a specific schedule. It is calling for better wind forecasting models and aggregation of output from all power plant under the Régimen Especial umbrella. CNE also wants see an end to guaranteed production subsidies for wind power, which the government requires electricity companies to pay. According to CNE figures, the average price paid for wind power in 2000 was ESP 11.2/kWh (EUR 0.067/kWh), based on a combined calculation of the two support options. Wind plant operators can opt for a guaranteed feed-in price of ESP 10.42/kWh (EUR 0.063), or a production incentive of ESP 4.79 (EUR 0.029/kWh) paid on top of the price for which the electricity is sold on the market. Last year, the Spanish electricity pool price averaged ESP 6.5/kWh. Both support rates remain unchanged this year (Windpower Monthly, February 2001).

Too costly

CNE is not alone in its criticism of what it feels is the excessive cost of wind power to the utilities. The board is seconded by the national electricity industry association, Unesa. At Madrid's third annual wind conference in May, Unesa questioned the rationale behind making the utilities pay for production from wind and other renewables via feed-in subsidies. "Given the irrefutable environmental advantages of renewables to society as a whole, costs should fall upon a wider base than just the electricity system," said Unesa's Angel Vivar Rodriguez. According to provisional Unesa figures, the extra cost involved in Régimen Especial production last year was around ESP 95 billion; wind accounted for 12.88% of this.

Spain's renewables producers' association, APPA, is "astonished" by the declarations. "The CNE is a public entity legally bound to pursuing publicly established objectives," says APPA's Manuel de Delás. "Spain's Plan de Fomento is a legally binding document, as is its 9000 MW installed wind capacity objective for 2010. The CNE's job is to make sure these objectives are reached. Instead, it not only complains that wind is going according to plan but also fails to criticise the fact that the rest of Spain's renewables, such as biomass, photovoltaic and small hydro, are not meeting Plan de Fomento objectives."

When the Plan de Fomento was approved, everybody knew that "the wind blows when the wind blows" and "the sun shines when it shines," adds De Delás. "Suddenly this has become a problem." He suspects a "misunderstood idea of the realities of the market" to lie behind the criticism. APPA has always maintained that the invisible costs of electricity from thermal plant -- such as stranded costs or subsidies to massive oil and gas pipelines, coal mining and nuclear power -- far outstrip any compensations paid to renewables, even without including environmental costs.

Relatively cheap

De Delás adds that even in the conventional energy sector the electricity market suffers costly intervention. He points out that the technical restrictions to the Spanish grid, especially in Andalusia and on the Spanish Mediterranean coast, force grid owner Red Eléctrica Española to intervene at the supply end. De Delás claims that putting technical considerations above the market -- in order to cover all areas with electricity supply -- implies extra costs of over ESP 40 billion a year. "That alone is double the price of what wind is costing the system," claims De Delás.

He doubts that better wind forecasts will help the utilities schedule wind output into their daily planning. He says that existing wind forecast techniques from Denmark and Germany cannot be applied to mountainous Spain. "Our microclimates don't lend to prediction and we have no offshore plant where prediction is easier," he says. He also points out that wind generation is now being used to stabilise grid voltage in some areas of the country.

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