Spain’s new law shakes PV landscape


Spain’s recently approved renewable energy law builds up on previous policies voted though last year aiming to sort out the debts accumulated in the country’s energy sector.

As expected, the new law replaces the already abolished feed-in tariffs (FITs) with a new system that calculates generator income separately as per project. The new income is based on a series of parameters published separately via a ministerial order, which takes into account a project’s “efficient operation.”

There is no doubt the new system is going to remunerate solar energy producers with smaller sums than FITs, Aitor Ciarreta, professor of economics at the University of the Basque Country in Bilbao, told pv magazine. “One should also bear in mind that the new system will only allow a ‘normal return of investment,'” Ciarreta added.

Indeed, the Spanish Ministry of Industry, Energy and Tourism (MINETUR) has said the new policy will guarantee a 7.4% internal rate of return (IRR) to solar power installations, yet payments will only be provided to projects that are not expected to receive a reasonable market rate.

There is a clear dispute between the Spanish government and the renewable energy lobby over the data used to base the policies and define a “plants’ efficient operation.” MINETUR is using data that “are not in accord with the reality. Their numbers are different to the Spanish Photovoltaic Union (UNEF) data,” a UNEF source told pv magazine.

Furthermore, UNEF said MINETUR had commissioned external consultants to produce studies on Spain’s renewable energy sector, but “it has not published the results yet because it doesn’t like them.” UNEF sources specifically referred to a recent interview of Spanish energy minister Alberto Nadal in local newspaper Cinco Dias, in which the minister appears to admit there are problems with the consultants’ reports and that “we [the ministry] don’t like them [the reports] because parts of them contradict the IDAE [the government’s energy research body].”

Another dispute revolves around the renewable energy priority dispatch established by a European Union law applicable in all EU member states. Priority dispatch for renewable energies remain, Ciarreta told pv magazine, however, the UNEF source argues that there are specific provisions in the new law that in practice cancel renewable plants output priority dispatch.

Last but not least, the new law obliges photovoltaic power producers to fully compete with traditional sources of energy in the wholesale market. All units should now go through the wholesale market (often referred to as the “Spanish pool”), Ciarreta said.

Details of the latest measures and what these mean for solar PV investors’ income, Spain’s electricity market design and the future of solar energy in the country will be examined in the upcoming August issue of pv magazine.