Spanish Tariff Revisions Update

July 23, 2010

By Paul Gipe

The Spanish government was expected to issue a proposed renewable energy action plan in June with approval sometime this summer. The action plan is Spain's formal response to the European Union's renewable energy directive and includes scenarios to 2020 when Spain's renewable targets must be met.

In addition, the government is also widely expects to propose a number of revisions to Spain's renewable energy tariffs this summer. Most observers expect Spain to cut solar PV tariffs by as much as 45% for groundmounted systems and as much as 25% for large rooftop systems, and only 5% for small rooftop installations. Revisions to self-consumption tariffs will also be on the table.

Spain has yet to find tariffs and interconnection policies for solar PV that result in a steady pace of development at a reasonable cost to ratepayers. Spanish developers installed 2,600 MW in 2008 but no more than 100 MW in 2009 as the government cut the tariffs and added new interconnection requirements.

Through the 1990s and early 2000s, renewable development was the result of the government's industrial and energy policy. Since 2008, policy has been driven by Spanish commitments to the European Union.

Spain's 12.5% of renewable generation already meets its 2014 target, reducing pressure from Brussels on the pace of development. This may give the Spanish government room to slow the pace of development.

Spanish wind developers have been installing a steady 1,500 MW to 3,000 MW of wind capacity per year for nearly a decade. The Spanish wind fleet is among the largest in the world with nearly 20,000 MW of total installed capacity.

Data from Red Electrica reveals that in 2009 wind provided 14.3% and solar PV 2.8% of supply.

Spain's Minister of Industry is proposing to eliminate the premium or bonus payment system and move the feed-in tariff program to the fixed-tariff portion of the program and to do so retroactively. This is expected to substantially affect solar PV and CSP plants. Of the 2,800 MW of solar PV capacity installed in 2008, 500 MW will be exempt from the move. This is a proposal by the ministry and will have to be acted upon by parliament to take effect.

The ministry's proposal will move through Spain's regulatory and legislative channels this summer.

Tariff revisions debated this summer will likely go into effect in 2011. The previous program revision, Royal Decree 661, went into effect in 2007. Further revisions were made for solar PV, Royal Decree 6, in 2009. Despite the turmoil around the solar PV and CSP tariffs, the revisions to the Spanish program are part of a regularly scheduled review.

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