Some sources stated that there was a lot of tension between the Ministries of Environment and Industry. The former was wishing to guarantee renewable energy investments through a profitable legislation framework and the later was willing to cut subsidies in order to lower the electricity bill.
According to the government, “the new Royal Decree means a push to reach the renewable energy goals for 2005-2010, so as the commitments set by Spain at EU level. With the development of these technologies, renewable energy will cover 12% of energy consumption by 2010 and it will prevent 27 million tonnes of CO2 by then".
The new clauses will not have retroactive effect. Those facilities that enter into operation before January 1st, 2008 will be able to get the current tariff throughout their lifetime. When they take part in the electricity market, they will be able to keep the former rules until the end of 2012. However, facilities can opt for the new rules on a voluntary basis.
Feed-in tariffs will be revised again in 2010, according to the level of achievement of the goals set by the 2005-2010 Renewable Energy Plan and the Energy Saving Strategy of Spain, taking into account the new goals for 2011-2020. 'Future revisions to tariff will not affect to the facilities that are now operating. This will provide greater safety for producers thus giving stability to the industry and promoting its development". This has been positively seen by many companies.
Profitability
As concerns profitability, the new legislation guarantees an average return on investment of 7% for wind and small hydro facilities if they get a fixed tariff, and between 5% and 9% if they prefer to take part in the market. Biomass, biogas and solar electric thermal will get a fixed return on investment of 8% or 7% - 11% in the market.
The increase in the biomass tariff varies between 50% and 100%, and for biogas this rise is between 16% and 40%. For the solar electric thermal technology the jump is only 17%.
Solar PV facilities will see a greater tariff for plants over 100 kW, and they will keep the current tariff for smaller plants.
Increases in tariffs from the 436/2004 Royal Decree levels (current levels) are as follows:12% for wind power, 7%-13% for small hydro power, 17% for solar thermal power, 82% for solar PV (over 100 kW), 16%-40% for biogas and 56%-113% for biomass (forest waste biomass will see a tariff improved by 6% only).
There will be a cap and floor system for renewable energy facilities taking part in the electricity markets. The tariff will then be adjusted on an hourly basis.
All the feed-in tariffs, caps and floors will be updated with the inflation rate minus 0.25% until 2012 and the inflation rate minus 0.5% from then on.
New clauses
The new legislation indicates that facilities will have to have a guarantee of 500 euros per kW installed for solar PV plants and 20 euros per kW for the remaining ones. This aims to go to guarantee that not too many facilities request a grid connection point. The amount will be given back once the facility enters into operation.
Other new elements introduced include a requirement for wind power to stay grid-connected in electricity tension falls and the possibility to get feed-in tariffs for hybrid technology (solar thermal + biomass, or energy crops using forestry waste).
A new renewable energy plan will be created during 2008 in order to design the new renewable energy strategy for the 2011-2020 period. The new goals set will be then considered in the feed-in tariff revision scheduled for late 2010.
For additional information:
www.la-moncloa.es
