Page 46 - European Energy Innovation - Summer 2014
P. 46
Summer 2014 European Energy Innovation


Spanish electricity reform:

the breakdown of european

legal security

By José Donoso, General Director of UNEF (Spanish PV Union, representing 85% of the PV industry in Spain)

New photovoltaic (PV) different system, with support deficit derives from the so-called
capacity installed paid in accordance with installed special regime—which as well as
globally last year hit capacity. The rate varies based on renewables, includes CHP and
an all time annual a government-devised standard waste treatment. Nevertheless,
record of 37,048MW, bringing the for investment costs, which bares the brunt of the cuts falls upon
cumulative figure to 136,700MW. little resemblance with reality. renewables.
Around 55,000MW of new
capacity is expected in 2014. Even before the government’s The government also justifies
reform proposals, the PV industry cuts by citing excessive profits
But all revolutionary change had already been pushed to the for renewables to date. Yet
sparks reactionary opposition limit by a series of drastic cuts, by other profitable sectors are
and PV is now experiencing which profits slumped to around left unscathed, highlighting
a lash back across the world 6%, stretching the payback period the discrimination at play. For
from electricity sector stalwarts. to 15 years. instance, grid operator REE, with
Politicians are beginning to a turnover of €1.8 billion in 2013,
bow to old guard lobbyists The system proposed has an EBITDA of €1.3 billion
by ushering in regulations to now, illogically based on and a net, post-tax profit of €600
raise economic barriers to a standardisation of 576 million, translating to a 34% profit
PV development; measures different cases, is arbitrary. Its on sales; way beyond the 6% the
that contravene market and application will leave some government deems “reasonable”
individual liberties. The paradox plants experiencing a 20% cut for PV producers.
is overwhelming: conventional in revenue and others a cut
sector agents previously in excess of 50%. In all, the Reform to self-supply PV
attacked solar power for being regulation will slash Spanish PV applications is also discriminatory.
uncompetitive but, now that it sector revenues by €920 million The Spanish government has
is competitive, they are putting against forecast income at the introduced a levy—a kind of “sun
obstacles in its way. time of making investments. tax”—making it economically
non-viable for citizens to install
Spain is suffering the starkest The cuts will prevent owners of PV power for self supply in their
expression of this reaction. 30-50% of installed capacity from own home; a frontal attack on
Renewables in general and even being able to refinance individual liberties. The “sun tax”
solar PV in particular are up debt—unless the banks are cuts the average payback period
against a process of regulatory prepared to write off around 60% from 12 years to 35 years for
reform aimed at changing the of that debt. By that score, the a domestic self-supply system
ground rules. And the changes government’s intention seems or from 7 years to 13 years in
are retroactive, undermining not simply to modify incomes for the case of a small business. In
basic principles of legal security these plants but, rather, to close addition to that economic barrier,
not only in Spain but also, by them down entirely. the reform prohibits energy
association, across Europe. storage.
The reform is supposedly spurred
The reform ends the off-take and justified by the need to slash To highlight the degree and
support system for renewables, a tariff deficit across the electricity scope of discrimination against
based on a kilowatt-hour sector. Yet, according to data from solar power, owners are obligated
production incentive. In its regulator Comisión Nacional de to register their self-supply PV
place, it plans a completely la Energía (CNE), only 22% of the systems or face a fine of up to
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