Spanish renewable energies regulations: the quiet after the storm

London, January 19, 2011


In recent months, the regulatory environment for the energy sector in Spain has been challenging. With tariff deficit ballooning and growing expectations that some measures would be taken, the Spanish Cabinet has finally passed a series of new regulations, culminated by recent Royal Decree-law 14/2010, of December 23, which directly affect the economic regime applicable to renewable power generation facilities (photovoltaic plants, wind farms and thermoelectric solar plants) as well as conventional power plants.

These regulations have reduced the remuneration and imposed new charges through different measures, which include suppressing tariffs and premiums, limiting the maximum equivalent hours of operation, charging a toll for evacuation of the power produced through the grid, and adding new technical requirements.

This legislation is expected to have a fairly modest or even a beneficial effect on the large utilities, but it may have more impact on projects or small scale producers, particularly photovoltaic (solar) plants, potentially raising financing issues and increasing banks’ fears about loan defaults in the sector.

As some of these measures apply not only to future facilities, but also to installations already constructed, commissioned and in operation, there have been claims against retroactivity and there are increasing discussions between specialists about feasible plans to mount a legal challenge against the revenue cuts.

In this seminar, we will put those events into context and address the characteristics of the new regulations and new instruments that may interest promoters of installations and financial entities. It is worth going through these new regulations to clarify them and analyze their impact on the Spanish renewable energies sector, which is preparing actions to protect its interests.