June 22, 2010 / 4:47 PM / in 7 years

Spain to cap solar subsidy with time limit -lobby

* Govt mulls subsidy cap at 1,200-1,644 hrs/year

* Lobby says proposal same as retroactive cut

By Clara Vilar

MADRID, June 22 (Reuters) - The Spanish government is mulling a cap on subsidies for solar panel power which would create as much legal uncertainty for the beleaguered sector as previous proposals, lobby group ASIF said on Tuesday.

ASIF chairman Javier Anta said the government proposed limiting the hours of output for which a solar plant could receive subsidies, instead of cutting the subsidies for plants themselves.

“This is tantamount to a retroactive cut and creates just as much legal uncertainty. We can not accept this,” Anta told a news conference.

Spanish renewable energy firms in recent months have seen share prices fall amid media reports the government may cut lucrative subsidies not just for future plants but for existing ones with set tariffs for 25 years of operation. [ID:nLDE63L1V8]

The government has set a deadline at the end of June for overhauling a system for subsidising renewables which has left the Spanish consumer owing utilities billions of euros.

The industry fears cuts could threaten jobs and a competitive edge it currently enjoys because Spain is the world’s second largest solar pruducer. [ID:nMDT009120]


According to ASIF, photovoltaic (PV) solar plants, which usually generate electricity for 1,600-2,000 hours per year, would only receive subsidies for 1,200-1,644 hours and get basic wholesale power price rates for the rest of the time.

PV plants receive lucrative subsidies for plants connected to Spain’s electricity grid before 2008, but much less for those connected later, and operators have said cutting this aid without compensation would also be against the law.

Renewable energy sources like wind and solar power receive so-called “feed-in” tariffs in Spain and other countries, which are designed to gradually allow them to become competitive with power generated from fossil fuels.

The International Energy Agency said in a recent study solar power can provide up to a quarter of the world’s electricity by 2050 but needs government lifelines in the next decade until it can compete with conventional power. [ID:nLDE64A275]

New solar PV power plants currently receive about 265-330 euros for every hour they generate a megawatt of electricity (MWh) in Spain, depending on whether they are smaller modules on rooftoops or larger free-standing plants.

That compares to spot power prices of about 40 euros/MWh <SP/BASE> on the wholesale market.

Spain’s national grid operator REE (REE.MC) estimates solar plants provided 3.7 percent of Spain’s electricity in May, and they have the capacity to generate 3,341 MW, or about 3.6 percent of the country’s total generating capacity. (Writing by Jonathan Gleave and Martin Roberts)

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