Exclusive interview: Cuts in Spanish PV applications would signal "the end"

Javier Anta has led the negotiations with the Spanish industry ministry and had to confront the public with a bitter message: the Spanish government appears determined to carry out its drastic and retroactive cuts. In an interview with pv magazine, the head of the association explained the situation.

Does the Spanish government really want to carry out a retroactive cut to the remuneration rates for photovoltaic applications?

Yesterday the undersecretary of state for energy matters at the industry ministry confirmed that plans are to cut the remuneration for existing plants by thirty percent and that in the future – probably starting in October – there will be a forty-five percent reduction for outdoor installations, twenty-five percent for large specialized plants and five percent for small plants. Or to put it in plain language: The government is moving away from its support for photovoltaics energy and is thus sending a pathetic signal to other countries that are counting on solar energy.

How can the government do such a thing? Isn’t a wave of complaints to be expected?

The government wants to lower energy costs in Spain in order to strengthen the competitiveness of the country, and so it decided that a major portion of the corresponding savings should come from the remuneration fund for renewable energies. In order to forestall complaints, the number of hours for which our plants are entitled to the officially stipulated remuneration will now be limited, while the remaining quantities will be remunerated based only on the price determined by the free electricity market. The courts will decide whether this is legal or not. But in any case, introduction of this thirty percent reduction for photovoltaics applications would mean the end of us.

Your demise?

Without a doubt. Nobody will invest in photovoltaics anymore. No one will trust the lawmakers in this country anymore if the government goes through with such a turnabout in its concepts. And besides, such a brutal cut would mean that current plant owners would be ruined. In the end the banks would be stuck with these plants as if they were housing mortgages without any margin for negotiations. This means the end of the Spanish photovoltaics market. When it comes to our own companies, in which approximately 20,000 people are directly employed, only those would survive that operate abroad.

What does this mean in terms of money?

In the past, approximately €22 billion were invested – which resulted in a total plant output of approximately 3,500 megawatts. These plants ultimately generate €2.6 billion in costs for electricity customers. The government cut would lower these costs by €700 million. But the problem here is not the money, but rather the enormous loss in confidence.

Are you referring to the legislative uncertainty?

Precisely. It is already affecting us at present. In the catastrophic year of 2009, we were paralyzed by introduction of the new law 1578/2008 which destroyed nearly 30,000 jobs and numerous companies. Then there was renewed activity at the beginning of this year. But because of this uncertainty – which was intentionally provoked by the industry ministry – everything has now come to a standstill again. No bank is currently financing photovoltaics plants in Spain, and the situation in the companies is critical.

Do you believe that a solution can still be found?

We recently suggested that remuneration for illegitimately connected plants in Spain be stopped, a measure that would have a savings effect of about €800 million.

Eight hundred million? Is fraud so rampant?

The production figures indicate that although only one percent more was built in 2009, 40 percent more was produced in comparison to 2008 – and that is impossible. If several factors are taken into consideration such as, for example, greater irradiation, over-dimensioning of the parks or improved locations, then there could be between 600 and 1,000 megawatts in Spain with a legally uncertain status. That does not mean that they would be illegal, it means that their situation must be clarified. If it turns out that irregularities are involved, then we arrive at the €800 million euros.

If you were aware of this, then why have you not spoken up until now?

Because detailed information on the Spanish photovoltaics park has stopped being published since November 2009. By the time we began working on our annual report, we had not analyzed this fact in detail and were unable to detect the discrepancies between installed output and the increase in production. For us, it is inexplicable why the government – which had to have known – did nothing against this for a whole year.