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'Energy giants out to kill off Spain's solar sector'

Alex Dunham · 21 Mar 2014, 15:58

Published: 21 Mar 2014 15:58 GMT+01:00

Several years ago, Spain was considered a world leader in solar power, with the government pumping money into the sector.

In the last two years, however, that has all changed, and the many thousands of people and businesses who invested in the industry are facing rising debts.

A day after his trip to Brussels to draw attention to the plight of the industry, The Local spoke to UNEF Managing Director about where it's all going wrong. 

How did Thursday's presentation at the European Parliament in Brussels go?

Very well. Despite opposition from Spain's (ruling) Popular Party, the European Parliament has decided to monitor the situation in Spain.

That's because of a citizen petition asking the Spanish Government not to impose (what is effectively a) retroactive payment reduction for renewable energy in Spain.

What does that mean in layman's terms?

Under the previous socialist government, companies and individuals were encouraged to invest in renewable energy production with the help of generous subsidies based on how much energy was generated.

Companies and shareholders put a lot of money into a booming industry, but meanwhile the Spanish government was ignoring a ballooning tariff deficit (the gap between energy production costs and what end consumers pay for power) at the hand of the Spain's main electrical companies.

When the conservative Popular Party came to power, they argued they had to find a solution to the €26 billion ($36 million) tariff deficit at any cost, to prevent energy prices from rising for consumers.

The premiums renewable energy companies once received for the power they generated were scrapped, and the new government started saying 'this is what you should get paid', based on numbers plucked out of thin air.

How does the current Spanish government justify these reforms and why do they appear to be punishing the renewable energy sector?

They claim green energy is behind the massive €26 billion ($36 billion) tariff deficit they've built up over the years, which is absolutely false.

They have no proof showing green energy production is to blame. Not a single euro of that debt stems from wind or solar energy production.

Prices for wind-generated energy are lower than those for gas, for example.

Everybody wants a bigger piece of the pie, and huge electricity corporations see green energy producers as a threat. Competitors have to be taken down.

What does the new law mean to an individual who invested in panels during the heyday of solar energy in Spain?

This depends on what stage of investment they were at, but at the very least they will lose all the money they have made.

There are thousands of families who spent all their savings and took out loans so they could invest in an industry which at the time seemed highly profitable.

But after the rule changes, including a tax on the energy they produce, they still have to pay bank back with interest and risk losing everything.

It’s like Bankia's preference shares scandal. Thousands of ordinary Spaniards were misled to believe they were putting their money into safe savings products. They were tricked and had their accounts emptied.

Unef Managing Director José Donoso. Photo: Heinrich Boell Stiftung

How about the current astronomical €60 million fines for people who don't pay a mandatory tax on the solar energy produce themselves (the so-called 'sun-tax)?

That relates to autoconsumo (generating your own electricity).

It's crazy to think that a nuclear plant which doesn't declare its gas emissions will be fined €30 million whereas an individual who doesn't pay tax on the power they've generated for themselves has to cough up €60 million (for serious infractions).

Even those who do pay the levy for powering their own homes have to know it now costs them more than if they were on the national grid.

It’s absurd and discriminatory.

Do you have any hope that Spain's government will change the draft law in the face of all this international opposition?

I think the planned reforms will remain pretty much as they are now, the government is just waiting for the right moment to pass the law.

Story continues below…

So neither you nor anybody else has been informed about when it shall be passed?

No, it will be introduced by decree, without any compromise or dialogue.

Spain now leads the way in Europe for budget cuts to renewable energy and obstacles put in place for private energy generation.

The European Parliament will only be able to intervene once the energy reform has been passed, in which case they could argue the Spanish government’s approach to 'autoconsumo' contravenes EU law.

In the face of this changing legislation, how do you see the future of green energy in Spain?

I can only talk from the point of photovoltaic energy, as that’s what our association stands for. The industry is booming at this stage, photovoltaic energy production is surging and prices have fallen by 80 percent this year.

Spain's main electricity companies see that as a threat, they're scared of how competitive the photovoltaic sector is becoming.

The world will soon be powered by photovoltaic energy and our government is irresponsibly undoing all the good work we’d done.

I truly believe that if nothing changes, Spain will have to import photovoltaic energy from other countries.

Don't miss stories about Spain, join The Local on Facebook and Twitter.

Alex Dunham (alex.dunham@thelocal.com)

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