Spain abolishes FITs entirely

15 July 2013

The country's new scheme will guarantee only a 'reasonable profitability' for renewable energy plants and that figure will be based on what the government says developers should have paid rather than their actual level of investment.

The Spanish government on Saturday formalized Friday's announcement that FIT payments for renewables would be scrapped by introducing the Real Decreto-Ley 9/2013.

The decree revokes earlier legislation governing the level of FITs applicable to PV installations and comes on top of four previous cuts to FIT payments in the country.

Instead the government has proposed to guarantee a 'reasonable profitability' to renewables investors of 7.5%.

However, that figure will be based on what the government determines to have been the benchmark cost of developing PV installations in the year in which they were established and there has been no indication as yet of what such costs will be or of what criteria will be used to calculate them.

With developers left at the mercy of the government's 'typical cost' figures there was the further unwelcome news that the 7.5% figure will be paid, instead of the FIT rate, retroactively from yesterday (Sunday). In other words, although the FIT rates will continue to be paid for renewable energy until the basis for the 'reasonable profit' figure is calculated, at that point, any overpayment will be recouped.

€26 billion tariff deficit

The government abolished FITs for renewables along with a raft of other reforms to the electricity sector in a bid to save €2.7 billion, half of it from renewables incentives.

The austerity-stricken country is attempting to bridge a €26 billion energy tariff deficit.

The government is also trying to encourage renewables take-up in the Balearic and Canary Islands where it claims they are more cost effective than conventional fuel generation.

Photovoltaic industry body UNEF has condemned the removal of FITs, saying the decision was made without consultation and comes on the back of previous cuts which have already reduced the profitability of PV installations by up to 40 per cent.