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Temporary Suspension Of Financial Incentives For New Renewable Energy Projects

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Article by Antonio Morales* and Rosa Espín

The Spanish Government has passed a Royal Decree temporarily suspending pre-allocation registration as well as abolishing financial incentives for new energy production projects from cogeneration, renewable energy sources and waste.

While the Government is planning a reform in the electricity industry to avoid tariff deficit, i.e., differences between income from access tolls and regulated activity costs, it has decided to suspend, on a temporary basis, financial incentives to build new energy projects. This situation has been brought about by, both the global economic crisis and financial difficulties in the electricity industry. Measures taken to date, have not been effective in correcting this deficit, thereby making overall sector development more difficult, and creating obstacles for the continuation of policies to promote electric power production from renewable energy sources.

The Government is maintaining its commitment to renewable energy as an essential part of "Spain's Energy mix". In 2011, a very high percentage of installed power was renewable, covering 33 percent of electricity demand and making Spain a leader in this type of energy. However, the current payment system is not sustainable with the reduction in demand as a result of the financial crisis. The Government noted that until the system is reformed and progress is made to words as renewable energy payment framework which promotes the efficient allocation of resources, the current payment system is suspended.

This measure will not affect either ongoing energy projects or those already registered with Pre- Allocations Registry. Further, it will not jeopardize either energy supply or the...

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