Exclusive: Spain must have better FIT laws to remain competitive

Talking about the industry backlash following the government’s proposals to lower PV FIT incentives, Mr. Fernando Calisalvo, managing director Yingli Green Energy Spain, S.L. said that he was receiving emails every day from the country’s associations, who say they find the current FIT situation “unacceptable”.

He went on to say that in order to help the industry, the government must be much stricter in terms of power production, who grants licenses, and volume caps.

“What is not reasonable is the way in which they [the government] have handled the law until now,” he explained to pv magazine. “They must listen… If you put a law in place for 25 years and therefore make a big investment because of that law, after one year you cannot change it.”

He added that it is the banks that will bear the brunt of FIT incentive decreases: “The banks are the companies that will suffer the most because the banks are actually the ones who provide this finance to all of these investors. So if this [the cuts] happens, the banks are losing huge amounts of capital. The government of course is trying to find out the right way without damaging investors and to avoid them investors going out of Spain, and to reduce the cost of the grid in terms of renewables.”

When asked what could be done to help the industry, he said that companies who have “developed projects in a fraudulent way” or which do not have the appropriate certificates must be investigated.

The other issue they can tackle is volume caps. He stated: “If they [the government] were expecting 400 megawatts (MW) in two years, how is it possible that they accept more than 2,000 in one year? It’s their fault of course… They must put a much more reasonable law in place in terms of procedures and easy to access to everyone, not just for the big influence groups. On the other side, the control of this law must be very strict in terms of production, in terms of who gives the licenses and in terms of volumes per year of the caps.”

Mr. Calisalvo additionally said that he believed a decision on FIT incentives will not be met until the end of September or start of October. In response to whether the industry was remaining positive, he said: “One day it is very black, the next day there is some hope, the next day there is a rumor that kills everyone.”

He added: “The industry is suffering a transition. Many people will criticize Spain, but my point of view is that Spain has already improved the industry. How? As the government is using FITs to push the industry, the manufacturers are growing in terms of capacity of production and improving the technology. Why? In order to satisfy the growing demand.

“[This demand] allows manufacturers to grow and to therefore have lower costs and better technology. In the same way, the installation companies and other equipment manufactures are doing the same – are growing on capacity of production, as an economy of scale they can reduce the price. And then the governments are reducing the FITs – pushing perhaps too far.

“The problem is,” he continued, “that during this process, the global financial crisis arrived and therefore the process of reducing the FITs has been increased much faster in Greece, in Spain, in Italy.”

He concluded by telling pv magazine: “It’s clear Spain is not going to be the most forward market, but we have one important advantage against all the emerging markets. As I always say to everyone, the big volume we have of demand in Spain is not due to the Spanish projects but to the Spanish customers. Our customers based in Spain… have already developed projects [in other markets]. That means my customers in Spain are developing projects in Italy, France and the USA and due to the knowledge they gathered during 2008, they are very competitive now… around 70 to 80 percent of the volume we sold to the Spanish customers, actually is delivered out of Spain.”