Investors in some of the country’s concentrated solar power (CSP) plants have sought out legal representation for what they say will be a multi-billion dollar fight.
In preparation for a new round of state policies aimed at reigning in Spain’s stifling energy sector deficit, investors in some of the country’s concentrated solar power plants have sought out legal representation for what they say will be a multi-billion dollar fight.
Coming two years after a similar legal push on behalf of investment funds in protest of earlier government actions, this latest round focuses on fresh legislative action passed last week. Industry lobbyists and CSP investors worry that coupled with a 7 percent energy production tax passed late last year, this latest attack on the country’s existing feed in tariff system “will virtually wipe out profits for photovoltaic, concentrated solar thermal and wind energy plants,” according to a Reuters report, with the most recent cuts costing an expected $17 billion.
Solar protests have been aimed at cuts introduced by the current government’s Minister of Industry, José Manuel Soria to help drive down the nearly $30 billion energy sector deficit his party inherited after early elections at the end of 2011. Soria and his party have placed the blame for the deficit on what they have called unsustainable subsidy programs, which shifted the heavy weight of transition costs to the state rather than the consumer. Earlier cuts from the outgoing Socialist PSOE party garnered legal action of its own, with over a dozen investment funds lodging complaints against Madrid as a result of P-focused reductions in subsidies.
These earlier cuts helped create a toxic atmosphere for international investors, with more than a few remarking last year that Spain’s renewable future was – for the moment – not worth another dollar.
Since taking over, Soria and Prime Minister Mariano Rajoy, of the center right Partido Popular, have followed an austerity-heavy strategy to deficit reduction, with cuts proposed across the energy sector. However, this approach has proven to be less than successful, with the deficit continuing to grow at double its expected rate over the last year, reaching $37.4 billion this month.
The new legal action comes just after Spain’s own solar PV association lodged a complaint against Madrid’s solar reforms to the European Commission. The appeal centered on what they said would be a devastating effect on the country’s domestic producers, forcing widespread bankruptcies and further losses.
In a mid-January meeting with Tatiana Marquez Uriarte, Assistant to the DG Energy Director General at the European Commission, representatives from Spain’s National Association of Renewable Energy Producers and Investors (ANPIER argued that adjustments to the feed in tariff system combined with a new seven percent tax on energy producers could lead to the collapse of about 80 percent of the country’s PV producers. Madrid has responded to ANIPER’s complaint by saying it is misguided, insisting that any cuts will not be applied retroactively.
While Soria defended the new cuts following their passage last week, his party’s austerity-heavy approach could see a shift soon as high ranking officials in Madrid and across Europe have begun to question the effect of a cuts-only path to recovery. With little to show from reductions beyond higher unemployment, less confidence and in the case of energy, a still higher deficit, Soria and his party may soon be forced to offer a different path forward. However, for a sector so close to death, any change in direction will likely be too late for Spanish solar.