Spain's Supreme Tribunal questions whether removal of the feed-in tariff was constitutional

The third chamber of Spain’s Supreme Tribunal has dictated an order in the question of whether the application of a new compensation program for existing installations could undermine the principles of legitimate security and legitimate confidence covered in the Spanish Constitution.

More than 500 appeals against the cuts to feed-in tariffs for PV have been presented to the Supreme Tribunal. In the order, the Tribunal manifests its doubts about the constitutionality of the policies handed down between 2013 and 2014 in the framework of energy reform instituted by Mariono Rajoy’s Popular Party.

Specifically, the Supreme Tribunal has questioned the second final provision in Royal Decree 9/2013 and the third final provision of Law 24/2013 of the Electricity Sector. The first provision replaced the existing program of a feed-in tariff established for solar installations and other renewables with a compensation mechanism based on participation in the market according to a complex system, so that these installations receive a “reasonable return” of 7.39%. Law 24/2013 also stipulates that self-consumption PV systems are subject to fees on generation.

The articulation of the concept of reasonable return has been severely criticized by associations in the sector as being ambiguous, not reflecting the actual circumstances of the investment, and putting at risk of bankruptcy 90% of Spanish PV installations put into operation under the previous system of feed-in tariffs.

It is notable that the report by consultants Roland Berger and Boston Consulting which establishes the return on investment for 580 types of installations has been questioned by the solar industry not only for failing to reflect the actual costs of PV installations, but also for the lack of transparency of the government which never made the report public. Afterwards, this rate of return is to be modified every six years.

The imposition of fees on self-consumption PV systems has also been severely criticized by the solar sector and environmental organizations, as well as from other political parties who have put forward this argument in recent campaigns.

The Supreme Tribunal also questions the constitutionality of immediate entry into force of the other provisions of Royal Decree 413/2014 and Order IET/1045/2014, which caused a period of uncertainty which led the owners of PV plants to conduct activities “without knowing the legal and compensation programs” they were operating under. The first of the provisions established retroactive changes to the PV feed-in tariff and the second established more than 500 classes of PV systems.

What at first seems to be good news may not be. The Supreme Tribunal has suspended the basis for delivering judgment on the many hundreds of appeals until the parties report on the potential unconstitutionality or the “possible approach under the preliminary ruling before the EU Tribunal”.

There is a small possibility that the Supreme Tribunal will send the case to the Constitutional Tribunal, the highest legal authority in Spain, before the end of the first quarter of next year. The median time for the resolution of a constitutional case is two years. In that case, hundreds of appeals would remain hoping for a judgment that would return completed PV plants to the old compensation program.

Translation by Christian Roselund. The original article in Spanish can be read on the pv magazine Latinoamérica website.