Spain’s government suspended subsidies for new renewable energy plants as part of the administration’s efforts to curb the budget deficit.
The government today passed a decree that will halt subsidies for new wind, solar, co-generation or waste incineration plants as it bids to rein in electricity system debts that reached 24 billion euros ($31.6 billion) by the end of last year, Industry Minister Jose Manuel Soria said.
“What is today an energy problem could become a financial problem,” Soria said at a press conference in Madrid today.
Spain’s power market racked up the debts as the previous government failed to balance the revenue from state-controlled prices with the cost of delivering power. The system’s costs have swollen over the past five years due to an increase in regulated payments for the power grid, support for Spanish coal mines and subsidies for renewable energy plants.
Today’s decision is a “first step” toward reining in the debts of the power system and officials are working on a broader package of measures, he said. The government is not planning to impose a levy on nuclear or hydropower plants and nor will it take on the power system’s liabilities, he added.
The total capacity of Spanish power plants is about twice the country’s peak power demand. A boom in investment in solar panel installations and combined-cycle gas-fired plants while the country is ahead of its targets for clean power production, Soria said.
“We don’t have a problem of production, generation, or capacity,” he said. The government “continues to back renewable energy,” and wants a “balanced mix” of energy sources, he added.
The suspension won’t affect existing plants or projects that have already been approved for subsidies by the government, Soria said.
–Editors: Reed Landberg, Amanda Jordan
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