Ray of hope for Spanish solar investors

A committee of Spain’s upper house of Parliament has approved an amendment that can effectively overturn recent retroactive cuts to solar subsidies if it becomes law.

Hope dies last, or so the cliché goes, but Spanish photovoltaic (PV) producers may be feeling a little more optimistic after Spain’s upper house of Parliament managed to introduce an amendment that may overturn recent retroactive cuts to solar subsidies.
 
Spain’s Comision de Economia y Hacienda del Senado, a committee of Spain’s upper house of Parliament, has passed an amendment to a forthcoming law on sustainable economic growth that neuters retroactive cuts introduced in the recently approved Royal Decree 14/2010.
 
The Royal Decree works by retroactively limiting the number of production hours eligible to receive the government’s feed-in tariffs, translating into cuts of 30 percent to the tariffs received by the country’s PV plants.
 

Spanish solar: tarrif cuts may be reinstated

The bad news is that, while Spain’s upper house of Parliament is likely to approve the new law on sustainable growth with the amendments to Royal Decree 14/2010 intact, the country’s lower house of Parliament, which originally ratified the Royal Decree, is unlikely to do the same.
 
“We have to be realistic,” Rocio Hortiguela, the head of renewable trade body ANPER, told local newspaper Diario de Navarra. “What’s transcendent about this amendment is that the government wasn’t expecting it,” he explained, adding that he hoped the amendment will prompt further renegotiations with the government to water down any retroactive measures.
 
One way to mitigate retroactive cuts, Hortiguela suggests, would be to set limits only for peak production hours instead of the general cut instituted in Royal Decree 14/2010.
 
In other news that should cheer up the local PV industry, European Energy Commissioner Gunter Oettinger slapped the Spanish government on the wrist earlier this month regarding the cuts. “Forward-looking changes [to tariffs] may be understandable and necessary, but the European Commission will not accept retroactive amendments,” he warned.
 
If all efforts to overturn the retroactive cuts imposed by Parliament fail, Juan Laso, the head of AEF, another renewable trade body, has warned politicians to expect a wave of bankruptcies across the PV sector. In his estimate, “the vast majority of the 60,000 small PV investors operating in the market [will] automatically default.”
 
Defaults are likely to be bad news for the likes of BBVA, which is said to be the biggest lender in the sector with some $3 billion in loans granted; Santander, the second-largest lender with some $2.3 billion committed; and Caja Madrid, which has lent $1.9 billion to the sector, according to data from New Energy Finance, a consultancy.
 
The Spanish PV sector has become a victim of its own remarkable success, as Spain rocketed to the top of the world’s solar power producers. Its success has happened on the back of generous government subsidies that, in 2009, amounted to €2.7 billion of PV tariffs, accounting for some 43 percent of all subsidies paid to the renewables industry.