The secrets of the new solar PV legislation in Spain

Spain's Council of Ministers approved on Friday the long-awaited solar PV Royal Decree, which will be valid as from next Monday. It replaces RD 661/07, which has allowed a boom of the solar PV industry in the country.

According to the government, the installed capacity in the country will be five times greater than the country's goal for 2010 (371 MW). According to Ms María Teresa Fernández de la Vega, Spain's Vice-President, it is necessary to establish a new goal for the long term, and a new legal framework that allows continuation to such a successful industry at a reasonable cost. The goals set are 3 GW for 2010 and 10 GW for 2020.

The new feed-in tariff approved is 0.32 eur / kWh for ground mounted facilities, rather than the expected 0.29 eur / kWh. as concerns rooftop facilities, the rate is 0.32 eur / kWh and 0.34 eur / kWh for small and big facilities, respectively. The feed-in tariff will be decreased every term if the goals are met.

One of the most important aspects of the new legislation is the pre-register requirement, which means that once all the paperwork is completed for each project, then a register will file all of them, informing right then (and not later!) about the feed-in tariff the project is entitled too once the construction work is finished. Facilities will have a size limit of 10 MW for ground-mounted facilities and 2 MW for rooftop ones.

The pre-register will have four annual calls and the feed-in tariff in each one of them will be calculated according to the demand from the former call, with drops in the subsidy that could top 10% per year if the whole cap is met. In theory the feed-in tariff could be raised too if 50% of the cap is not reached in two consecutive terms (which seems highly unlikely).        

This new scheme is supposed to benefit consumers, as it offers a feed-in tariff that aims at matching the technological learning curve, which should end up lowering solar energy costs. It also benefits investors, who will now be able to predict profitability with more accuracy than they could in the former -uncertain- regime.

The new law introduces a cap of 400 MW/year, two thirds of which will go to rooftops, with the rest going to ground-mounted facilities. The only negative surprise of the new legislation  is the fact that an additional 100 MW and 60 MW cap has been added to the 2009 and 2010 counts, respectively, to be used only on ground-mounted facilities. The drafts previously discussed with the government included 200 MW and 100 MW instead.

The first call results will be announced on December 15, 2008, three months before it was expected by the industry associations (which means that the expected slowdown in the industry will be reasonably short). The annual caps will be increased by the same percentage as the one by which the feed-in tariff is reduced for that same period, with a limit of 10% (i.e. if the feed-in tariff is reduced by 8%, then the cap will be increased by 8%). 

The solar industry, reasonably happy
Spain's Asociación de la Industria Fotovoltaica (ASIF), Asociación de Productores de Energías Renovables (APPA) and Asociación Empresarial Fotovoltaica (AEF), the three biggest industry associations, have created a joint press release highlighting the government's firm commitment to support solar power in a sustainable way.

They believe that with this legislation the Spanish solar PV industry might be among the world's most relevant ones in a decisive moment: 2015. Most analysts expect grid parity (the moment in which solar energy is cost effective, compared with fossil utility-generated electricity) to be reached by then. The associations are aware, however, that the next two years will be challenging for the Spanish solar business.

Last, but not least, they claim that greater support is needed to promote rooftop facilities in the country, and it is expected that the legislation applicable to this area be revised before the expiration of the legislation passed today.