Spain Halts Subsidies for Renewables

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland) -- Spain's new government has put a stop to its feed-it-tariff (FiT) for new renewable energy projects, blaming massive debts created by the scheme as well as its own wider economic crisis.

The 'temporary' halt to subsidies was announced by Spain's Ministry of Industry, Tourism and Trade (MITyC) and will affect all new solar photovoltaic (PV), concentrated solar power (CSP), wind, co-generation, biomass, biogas, small hydro and energy from waste (EfW) projects. The FiT suspension will not affect projects that are already receiving payments or that have been previously approved.

The cuts have been introduced by the country's ruling center-right, Popular Party, which replaced the previous Socialist Party government in November last year. Spain's subsidy schemes for the energy industry, which include backing renewable energy projects, supporting Spanish coal mines and paying too much to the power grid, have racked up a massive debt of approximately €24 billion ($31 billion).

"First and foremost there is an unequivocal goal throughout the government to reduce the deficit and no policy area is immune from that," explained Industry Minister Jose Manuel Soria. "What is today an energy problem could become a financial problem."

In its official statement, the Ministry of Industry, Tourism and Trade said: "It is intended to temporarily suspend a payment system which entails costs which are too high for the electricity system and which has led to continuously rising tariff deficit. This measure will not threaten the security of the supply or compliance with the European Union's renewable energy targets."

"The Government maintains its firm commitment to renewable energy as an indispensable part of our country's energy mix. In 2011, 93% of the installed power was from renewable sources and these facilities cover 33% of electricity demand, making Spain one of the most advanced countries in this regard. However, maintaining the current payment system is not compatible with the current economic crisis and falling demand".

The government's decision to halt its FiT schemes has been attacked by many industry groups.

The Spanish Wind Energy Association (AEE) said: "The Association wants to show its concern for a measure that jeopardises this industry and jeopardises the future development of this important sector, as well as that of over the 30,000 people employed in it. It risks a world-leading industry, with exports of more than €2.4 billion ($3.1 billion) a year and which is fundamental for the energy independence of Spain".

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