Welcome to IEA Wind Member Country Activities for Spain
According to the Spanish Wind Energy Association’s (AEE) Wind Observatory, the installed wind capacity in Spain reached 22,959 MW in 2013 with the addition of only 175 MW, the lowest amount since 1996. Compared to 2012 when 1,112 MW were installed, the market dropped by 84% in 2013.
According to the national transmission systems operator Red Eléctrica de España, (REE), electrical energy demand decreased 2.3% from 2012 to 246.16 TWh. Wind energy produced approximately 54.3 TWh of electricity, equaling 20.9% of the yearly energy electricity demand. For the first time in Spain’s history wind power was the main source of electricity generation over a whole year. Other big contributors to the system were nuclear power plants (20.9%), coal (14.3%), hydro (12.9%) and gas combined-cycle power plants (9.3%) (Figure 1). In January 2012, the Spanish government approved a decree (RDL 1-2012) halting the existing feed-in-tariff (FIT) support scheme that allowed tariffs up to 0.082 or 0.087 EUR/kWh (0.113 or 0.120 USD/kWh) or for a period of 20 years. At that time all the renewable energy generation plants pre-registered in the FIT system still had the possibility to go ahead and carry out registered projects. Those projects (roughly 1.2 GW) were gradually completed during 2012 and 2013. The decree established a de-facto moratorium on new renewable energy generation receiving FITs.
But the RDL 1-2012 was not the only hardship for wind power promoters. The government has been facing huge problems to deal with the so-called “tariff deficit.” In 2013, according to official data, Spain had accumulated a 26 billion EUR (36 billion USD) electricity tariff deficit—the difference between the sector revenues and payments from final clients and the costs of exploiting the electrical system. In order to address this, the current government has taken several measures, among which is a reduction in the acknowledged FIT support scheme with retroactive effect and an increase in the taxation of current electricity generation of about 7% (Act 15/2012).
Also, in February 2013, the Spanish government decided to withdraw renewable energies from the spot market and established a mandatory regulated FIT, which would no longer be updated by CPI (RDL 2/2013).
In July 2013, the Spanish government decided to change the current renewable energy FIT payment system (RDL 9/2013). Instead of paying the established tariff for 20 years, the remuneration to be paid will be based on the so-called “reasonable profitability” for each project, depending on a wide variety of factors including age, cost, and amount of subsidies the project has already received. This scheme still has to be approved but will likely further reduce the income of current renewable energy plants.
The Law 24/2013 on the electricity sector and the draft of Royal Decree on renewable energies (in the pipeline), added to the economic impact of other provisions not related to wind, and will also cause economic loss (such as the Order on interruptiblity and the draft royal decree on capacity payments). The new state regulation on renewables—that is shared among the Royal Decree-Law 9/2013, the Law 24/2013 and the renewable Royal Decree proposal—states that the remuneration shall be reviewed every three years based on investment market prices. Every six years all of the compensation parameters may be reviewed as well, including the alleged reasonable profitability. As a result, investors have no guarantee about income for the entire regulatory life of the projects, which is 20 years.
But regulation is not the only insecurity in the Spanish power system—electricity demand has dropped approximately 8% since 2008. With more than 100 GW of installed total electrical generation capacity, and a historical demand maximum of 45 GW, there is currently an overcapacity of generation and some of the existing combined gas cycle plants are almost idle (working 20% of the time). This has led to a lack of interest for new energy developments in Spain.
In any case, the moratorium along with the regulatory uncertainty and economic recession has created an uncertain situation, not very favorable for new installations. For this reason more than 5,000 MW projected promotions have been stopped.