Spain has imposed new rules on renewable energy that are designed to ensure an attractive return for investors in hydropower and other renewable energy projects while limiting what the government called excessive profits by some developers.
The government said it would limit excessive profits of firms producing power from renewable sources like wind, and offering them a limited but guaranteed return instead.
Spain’s Renewable Energy Plan 2005-2010 envisages 12 percent of Spain’s energy consumption coming from renewable sources by 2010. The government’s plan for 2010 includes building new small hydroelectric plants, quadrupling biomass generation, doubling wind energy capacity, and rapid growth of solar power. (HNN 12/14/06)
The new rules, which go into effect on Jan. 1, 2008, guarantee return on investment of 7 percent for wind power, in place of the fluctuating system that has applied until now. Wind power now gets a premium of 30 euros (US$40.34) per MWh on top of the daily wholesale power pool price, which can fluctuate between 30 and 70 euros (US$94).
The new rules guarantee a return of 7 percent to wind and hydroelectric plants that opt to sell power to distributors direct and a return of between 5 and 9 percent if they choose to participate in the electricity pool market. The new premiums will be revised every four years.
The industry ministry claims the current system has been handing wind power generators returns of more than 15 percent. The government says it can save about 400 million euros (US$537 million) a year by cutting the current subsidy system.
Utility Iberdrola says renewable law is good news
Spain’s Iberdrola, the power company that has most at stake in wind energy, said it is happy with the renewable energy law, which was published May 26.
“The new law is a significant improvement on the first draft last November,” Iberdrola’s Renewable Energy Director Xavier Viteri told analysts May 29. “We were worried about what would happen to existing installations and the more than 500 megawatts (of projects) we have in the pipeline.”
The law, passed by decree, allows any parks already running or planned to keep the existing regime up to 2012, without the price cap and floor system included in the new system.
Iberdrola has 4,000 MW of renewable energy generation capacity installed in Spain, a third of the country’s total wind capacity to date.
Iberdrola sale to cash in on renewables rush
Iberdrola is moving to cash in on investor enthusiasm for renewable energy with a plan to sell 20 percent of its green power unit Iberenova. The public share offer would come in the last quarter of the year.
Analysts and industry sources put the value of the entire renewables unit at between 16 billion euros (US$21.52 billion) and 20 billion euros (US$26.9 million).
Iberdrola is the biggest producer of wind power in the world. Its renewable capacity stands at 6,562 MW, up about 2,000 MW since the purchase of Scottish Power of the United Kingdom, which owned considerable wind power assets in the United States.
Iberdrola plans to link both companies’ renewable businesses into Iberenova, it said in a statement. Iberdrola’s generation includes 21 major hydroelectric projects totaling 6,895 MW, while Scottish Power’s portfolio lists nine hydro projects totaling 564 MW. (HNN 4/26/07)
Iberenova has a development portfolio of nearly 38,000 MW of which about 6,000 MW are in Spain, a similar amount in Britain, 5,400 MW in the rest of Europe, and 19,200 in the United States.