The Government says that the measures approved by the Council of Ministers in the new Royal Decree "ensure a reasonable return on investment, provide certainty for the future, and respect the rights of the owners of such facilities". In a press release issued Friday, the Council of Ministers also explained that the new regulations for renewable energy have been enacted in order to "reduce costs, especially those associated with PV energy, to benefit consumers, improve the technical integration of renewable energy and combined heat and power (CHP) systems, and simplify and streamline administrative application procedures".
Among the measures contained in the new Royal Decree, Moncloa highlights that owners will only be entitled to receive a premium for the electricity generated by their PV installations for twenty-five years and that the FiTs will be cut by the percentages set out above "for the first round of preliminary assignation subsequent to the entry into force of this Royal Decree". The Government calculates that the reductions in regulated tariffs for PV will lead to savings for the electricity system in the order of €141.5 million in 2011, €202.3 million in 2012, and €263.4 million in 2013. In total, €607.2 million over the three-year period.
The new rules, which the Government claims offer legal certainty to the sector, modify three previous Royal Decrees: that issued on 25 May 2007 regulating the generation of electricity using renewable energy and CHP; that of 24 August 2007, through which the unified regulation of electricity system measurement points was approved; and the 26 September 2008 Royal Decree on the remuneration of electricity generated using solar PV power. The Government insists in its statement that "the new law ensures adequate compensation for the facilities, which is attractive to developers of new projects and ensures a return on investments".
ASIF thinks otherwise
The Spanish Photovoltaic Industry Association (ASIF), however, rejects the new Royal Decree because "it has been drawn up in its entirety behind the sector’s back – there were some pseudo-negotiations during which the Ministry of Industry never showed any willingness to compromise – and will reduce the solar market in Spain by almost half".
ASIF says that the "sudden and brutal tariff reduction of 45% for ground-based PV arrays will mean that they are no longer profitable and therefore, the total solar market will be reduced by almost 50% from 500 MW per year prescribed by regulation to just over 250 MW. This reduction, which breaks the agreement reached two years ago with the Ministry, will continue until technology costs have declined in the same proportion, something that will take years in regions of the country with less irradiation".
The Spanish PV industry (which is fourth in the world after China, German and Japan) has a production capacity of more than 1,000 MW per annum. Without the support of its natural domestic market, this latest regulatory reform will inevitably require Spain to rely on foreign markets to survive.
ASIF is considering initiating legal proceedings against the restriction on the right to receive a tariff for PV installations after 25 years established in the new regulation, which it considers is "a retroactive measure that is clearly discriminatory compared to other renewable energy sources".
End of uncertainty, but what about the future?
Despite its concerns, the photovoltaic trade association "trusts that the new regulations will end the period of regulatory uncertainty and paralysis that the national PV market has endured for over two years. The outcome of which has been that only diversified firms or those with operations overseas have survived. In late 2009, the sector had already lost about 30,000 jobs, and since then the destruction of businesses and jobs has continued to increase".
According to ASIF, "Spain would have earned €5 billion and generated 40,000 permanent quality jobs up to 2020 just by maintaining market volume at 500 MW per year". It also considers that had its proposals to implement a regulation that included rewarding people for generating photovoltaic energy for own consumption been accepted, "Spain would have enjoyed even higher economic, environmental and energy security returns. With the same financial investment provided for in the previous regulation, the country could have over 17,000 MW of PV capacity in 2020".
The figure of installed capacity provided by ASIF for the end of the decade contrasts sharply with the 8,673 MW identified in Spain’s National Renewable Energy Action Plan; and is even further off the 6,735 MW recently proposed by the Energy Subcommittee of the Spanish House of Representatives.
The Spanish Photovoltaic Business Association (AEF) also responded to the new Royal Decree, releasing a statement on Friday saying that it was also against the measures taken, but was pleased that the regulatory uncertainty had at least been lifted. While, AEF’s President, Juan Laso, echoed ASIF’s concerns, warning that the tariff cut is "so intense, €600 million, it will take many months to ensure that technological advances and cost reductions can enable us to reinvest in this sector in Spain", he remained optimistic of the sector’s future in Spain, saying that "even so, we will succeed".
For additional information:
Spanish Ministry of Industry, Tourism and Trade
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