Spain Suspends Feed In Tariffs To Battle Debt
As part of a broader programme of
emergency financial measure to begin to tackle a massive national debt, the
Spanish government has decided to suspend all FiT activity for the foreseeable
future. Industry Minister Jose Manuel Soria was quoted suggesting the move was
to help rein in the budget deficit and reduce energy borrowings backed by
the state that reached 24 billion euros at the end of 2011 and said that what
is an energy problem today will be a financial concern tomorrow if action is
not taken. In general the local industry agrees with the need for cuts but as
can be imagined, not everyone is content with such a drastic move.
Given the economic crisis and the
situation of the electricity system, which carries a rising deficit rate that
threatens sustainability, the Council of Ministers has adopted a Royal Decree
law to temporarily suspend the pre allocation of renewable compensation
procedures and suppress, also on a temporary basis, economic incentives for new
installations of production of electricity from renewable energy sources, waste
and co-generation.
The complex economic and financial
situation encouraged the removal of incentives for the construction of these
facilities, on a temporary basis, while is set in motion a reform of the
electrical system to avoid the generation of tariff deficit, that is, the
difference between the revenue from tolls for access to transport and
electricity distribution networks and the costs of the regulated activities of
the system. The measures undertaken to date have not been sufficient to correct
this deficit, which constitutes a barrier to the proper development of the
sector as a whole and, in particular, for the continuation of the policies of
promotion of the electricity production from renewable energy sources.
The objectives to be achieved by
the year 2020 contained in the recently adopted renewable energy Plan provide
the Government no room for manoeuvre in setting the path of implementation of
the facilities for production of electricity from renewable sources from the
current time. This fact, together with the current installed generation
capacity is sufficient to ensure the coverage of the expected demand, make that
this measure does not affect the security of supply nor Spain commitments
towards the European Union in the field of renewable production in the face of
2020.
The Government maintains its firm
commitment to renewable energy as an indispensable part of the energy mix of
our country. In 2011, 93 per cent of the installed power was from renewable
sources and these facilities covered 33 per cent of the electricity demand,
which makes Spain one of the most advanced countries in this regard. However,
maintaining the current system of remuneration is not compatible with the
current situation of economic crisis and decline in demand, while reform the
system and is moving towards a renewable remuneration framework to promote an
efficient allocation of resources, is to temporarily paralyze the remuneration
system.
The measure will affect those
installations that still not have been registered in the register of
pre allocation of special regime on the date of entry into force of the Royal
Decree law as well as for the ordinary regime facilities that the date of entry
into force of the rule had no administrative authorization issued by the
Directorate-General for energy policy and mines. The suspension will affect
technologies benefiting from the special regime, i.e., wind power, solar
photovoltaic, solar thermal, co generation, biomass, biogas, Eolian and waste
facilities for ordinary regime of assimilable technologies to those included in
the special regime. The standard has no retroactive, i.e. not affect facilities
already underway, already authorised premiums or installations already
inscribed in the registers of pre allocation.
Also, pending installations which
were not listed in the pre-registration at the time of entry into force of the
regulation, have the possibility to withdraw your application for registration
in the register of preallocation, in which case are you returned fully
deposited collateral. In addition, be returned also guarantee to those
facilities registered with the prerregistros, within two months from the entry
into force of the standard, opting not to carry out the execution of the
installation.