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By Jason Deign in Barcelona

It did not take José Manuel Soria long to show his hand.

Pausing only to signal support for nuclear power and take briefings from the renewable-unfriendly heads of Spain’s big electric companies, the Spanish Industry Minister took a pot-shot at the renewable energy sector barely a month after entering office.

On January 27 the recently elected People’s Party (Partido Popular, or PP) passed a Royal Decree indefinitely halting all subsidies for new renewable energy projects after the current inscription period runs, in 2013. It paints a grim picture for Spain’s subsidy-driven CSP market.

However, given the parlous state of the national finances that the PP inherited from the outgoing Partido Socialista Obrero Español (Spanish Socialist Worker’s Party, or PSOE), some in the industry are relieved the measures did not go further.

The Spanish electrical industry association Unesa, whose anti-renewable stance is regarded as being a product of big electric company interests in nuclear and non-renewable energy generation, had called for support to be withdrawn for CSP projects already under development.

In the event, says Valeriano Ruiz, president of Protermosolar, Spain’s CSP industry grouping, the PP has played fair and steered clear of the retroactive cuts favoured by the former Spanish administration. “Until 2013 there’s no problem,” he says. “The problem is after then.

“The projects on order now can be completed. And in terms of investment in research and development, it will not affect us.”

Clearly, though, the country that many might consider the cradle of modern CSP is soon to become a much less attractive place for solar thermal development.

Subsidy block

The Spanish government has given no indication of how long its subsidy block will stay in place, or if subsidies will ever be reinstated.

Says Ministry spokesperson Emilio Jarillo Ibañez: “We have said many times it will last as long as it takes to fully reform the Spanish electric system, and nobody knows how long that will take.”

The view of Gus Schellekens, a director in the UK Sustainability and Climate Change team at PwC, is that: “Spain has had a bumpy ride, your classic boom and bust. Spain had a good run over a couple of years, but the market will slow down. It’s got to, if you look at the finances.

“The challenge will be whether the Spanish companies can continue to find customers abroad that support CSP and can support similar project structures to how they work in Spain. There’s a danger they can’t build on the lessons learned in Spain.”

Ruiz accepts that most Spanish CSP companies have been bracing themselves for an eventual decline in their home market and have been working hard to expand into foreign markets.

But there is growing concern this might not be Soria’s last attack on the Spanish renewable energy sector, which provides 110,000 jobs, according to the Renewable Energy Producers’ Association.

The PP has historically been pro-nuclear and came to power with an avowed intention to support gas-based energy systems.

Recent events have reinforced a feeling in the Spanish renewable energy community that the party is following the PSOE’s footsteps in using the sector as a scapegoat to protect the interests of the big electrical companies.

Formal meetings

It is understood last month’s Royal Decree was rushed through before the minister had held any formal meetings with renewable energy bodies or even with Spain’s autonomous communities, many of which support green power industries.

The rationale for the law was to put a brake on Spain’s so-called tariff deficit, a €24 billion debt that the state has built up by holding back part of the costs for electricity generation from end users.

However, a number of observers have pointed out that the tariff deficit is not so much caused by renewable feed-in tariffs as by a quirk of the energy system that ensures traditional energy producers are paid the same rate for all types of generation.

This rate is generally equivalent to the most expensive form of generation, giving the electrical companies massive windfall profits on the power they get from fully amortised nuclear and hydro plants.

Writing in the national daily El País, Jorge Fabra Utray, a former president of Spanish grid operator Red Electrica de España, said: “The government should focus on reforms that redirect the price that electricity consumers pay towards the real cost of its production.”

For now, those in Spain’s renewable energy community can take some comfort from the fact that Soria’s law is drawing flak from the European Commission. And the Canary Island-born minister has already announced his home archipelago will be exempted from the decree.   

None of this instils much confidence in Soria’s publicly stated claim that the PP “is still betting on renewable energies,” though. “That is what all the governments say,” laments Ruiz of Protermosolar. “On energy policy, the government is in the hands of big business.”

To respond to this article, please write to:

Jason Deign: jdeign@csptoday.com

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Rikki Stancich: rstancich@csptoday.com