Welcome to IEA Wind Member Country Activities for Spain
According to the Spanish Wind Energy Association’s (AEE) Wind Observatory, installed wind capacity in Spain reached 22,986.5 MW in 2014 with only 27.5 MW added, the lowest amount in twenty years. Compared to 2013 when 175 MW were installed, the market dropped by 84.3% in 2014.
According to the national transmission systems operator (TSO) (Red Eléctrica Española or REE), electrical energy demand decreased 1.2% from 2013 to 243.49 TWh. Wind energy produced approximately 51.1 TWh of electricity, equaling to 20.4% of the yearly energy electricity demand. Wind generation was the main source of electricity in the Spanish power system during the months of January, February, and November.
The Energy Reform policy changes began in 2012. In January 2012, the Spanish government approved a decree (RDL 1-2012) halting the existing feed-in-tariff support scheme that allowed tariffs up to 0.082–0.087 EUR/kWh (0.099–0.105 USD/kWh) for a period of 20 years. At that time, all the renewable energy generation plants that were pre-registered in the feed-in-tariff (FIT) system still had the possibility move forward 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.
The RDL 1-2012 was not the only problem for wind power promoters. The government has been dealing with the so-called “tariff deficit.” In 2013, according to official data, Spain had accumulated a 26.0 billion EUR (31.5 billion USD) electricity tariff deficit (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 steps, 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).
But this is not all. In February 2013, the Spanish government withdrew technically renewable energy from the spot market and established a mandatory regulated FIT which would no longer be updated by CPI (RDL 2/2013). Then in July 2013, the Spanish government changed the current renewable energy FIT payment system (RDL 9/2013). Instead of paying the established tariff for 20 years, the remuneration will be based on the so-called “reasonable profitability” for each project, depending on a wide variety of factors as age, cost, and amount of subsidies the project has already received. This scheme still has to be approved, but it will likely further reduce the income of current renewable energy plants.
The new state regulation on renewable—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. This means that, investors have no guarantee for the entire regulatory life of the projects, which is 20 years.
But regulation is not the only insecurity in the Spanish power system: power demand has dropped some 8% since 2008. With more than 100 GW of total capacity, and a historical demand maximum of about 45 GW, there is currently an overcapacity of generation and some of the existing combined cycle gas 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 regulatory uncertainty and economic recession has resulted in the dramatic fall in new installed wind power in 2014. Not all the parks that were registered in the register of pre-allocation have been installed—approximately 150 MW have been out—and in that only 15 out of the expected 450 MW have applied to the call for proposals in the Canary Islands, where the government is very interested in installing new wind power to reduce the additional generation costs of conventional power stations.
Despite obstacles, new wind projects are under development without any subsidy as the 14-MW wind farm developed by the Spanish utility Gas Natural Fenosa (GNF) in the Galicia region.