Outrage over Spanish renewables support cut

Renewables producers threaten legal action after anti-inflationary subsidy reduction

Renewable energy producers and environmental NGOs have reacted angrily to a decision by Spain's council of ministers announced on 31 December to cut subsidies for electricity produced from renewable sources.

The cuts of 5.4-8% will affect all types of renewable energy, but newer sectors such as solar thermal and biomass are likely to be hardest hit. The measures are part of a package aimed at reducing retail electricity prices by 2.1% in 2000 as part of the government's anti-inflation strategy.

Critics slated the announcement, saying it was ironic that it came a day after the council of ministers approved a national plan for renewable energy promotion which commits Spain to a target of producing 12% of its energy from renewable sources by 2010.

The Spanish Association of Producers of Renewable Energy (APPA) has threatened to take legal action to reverse the decision. It calculates that its members will lose euros 27m (SPtas4.5bn over the next year as a consequence. It described the reduction in subsidy as "an offence" that would "put a brake on the development of clean energies". The association claims that the new electricity price structure has been tilted against renewables by lobbying from conventional energy producers.

Incentive payments to producers of renewable energy were introduced in Spain in 1994 and given a legal framework by the December 1998 law on electricity supply. Under this law the subsidy on wind energy, for example, was set at euros 0.031 per kilowatt hour to be paid for by consumers in their electricity bills. The system of incentive payments has particularly benefitted wind power, capacity of which has rocketed from 834 megawatts at the end of 1998 to about 1,500 megawatts now.

Follow Up:
APPA, tel: +34 93 414 2277.

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