Spain’s right-wing People Party government has finally passed the decree ratifying deep retroactive cuts to renewables power, amid fears it will lead wind operators to default on loans.
The decree sets specific rules to meet the electricity law of July 2013, which ended all renewables production incentives even for existing capacity. It was drafted in February and has been universally attacked by the Spanish wind sector.
Instead, top-up subsidies for existing capacity are based on a “reasonable profit” concept, set at 7.5% across useful plant life. This compares with double-digit profits previously attained.
Accordingly, capacity online before 2005 – 8.4GW, or 37% of the cumulative total – is stripped of all subsidies, breaking the Spanish state’s promise to maintain incentives for 20 years.
That capacity will now receive the going market price only, as will all new capacity.
The decree, published this morning without negotiating with the sector, is “unfair” and “incomprehensible”, said Luis Polo, director general of national wind association AEE.
Since the July law, and until the decree, operators carried on receiving the incentives that existed before before July 2013. Application of the new rules is now backdated to that month and operators must pay back the excess.
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