Wind power in Spain
General
The whole spectrum of renewable energy policies is laid down in the Program for Promotion of Renewable Energies 2005-2010 (PPER or PFER in Spanish). Revised version of PFER 2000-2010, the strategic target of PFER is to achieve by 2010 a 12% of primary energy consumption by renewables (with, a.o., a 30.3% contribution of renewables to electricity consumption), through a joint combination of subsidies, tax exemptions and feed-in-tariffs for electricity production. The total investment for the realisation of the renewable energy plan (PPER) for the period 2005-2010 is estimated to 23,600 M€, from which 36% (8,490 M€) would be contributed by public support (feed-in tariff electricity: 4,960 M€, biofuels: 2,850 M€, subsidy direct to the projects: 680 M€).
According to the Directive 2009/28/EC of the European Parliament and of the Council on the promotion of the use of energy from renewable sources the target for the share of energy from renewable sources in gross final consumption of energy in the year 2020 for Spain is 20% (in the year 2005 the share was 8.7%). The Directive has a mandatory 10 % target for transport to be achieved by all Member States, which refers to renewable sources as a whole, not biofuels alone.
Renewable energy projections according to the National Renewable Energy Action Plan for Spain
The National Renewable Energy Action Plan (NREAP) for Spain was submitted in July 2010. The target according to Annex I of Directive 2009/28/EC is 20% for the year 2020 and the projected NREAP share in that year is 22.7%. According to the projection, the most important contribution in the year 2020 is expected from wind power (78.3 TWh or 6729 ktoe, 31% of all renewable energy). Second important contribution is expected from biomass (renewable heating and cooling) (4950 ktoe, 22% of all renewable energy). The third largest contribution is from hydropower (39.6 TWh or 3404 ktoe, 15% of all renewable energy). Wind power contributes with 38.0 GW (78.3 TWh) in the year 2020 (onshore wind 35.0 GW and 70.5 TWh, offshore wind 3.0 GW and 7.8 TWh). For solar photovoltaic the 2020 contribution is projected to be 8.4 GW (14.3 TWh). For solar thermal the 2020 contribution is projected to be 644 ktoe. The two most important biofuels are projected to contribute 3100 ktoe (biodiesel) and 400 ktoe (bioethanol / bio-ETBE) by 2020. The renewable electricity production from solid biomass amounts to 7.4 TWh (636 ktoe) and for biogas it is expected to be 2.6 TWh (225 ktoe). The consumption of renewable heat is expected to amount to 4850 ktoe for solid biomass and 100 ktoe for biogas.
Renewable Electricity: wind power
In Spain, the generation of electricity from renewable sources is mainly promoted through a price regulation. System operators may choose between two options: a guaranteed feed-in tariff and a guaranteed bonus (premium) paid on top of the electricity price derived on the free market. Furthermore, investments in systems and equipment required for the generation of electricity from renewable sources may be deducted from tax.
Royal Decree no. 661/2007 of 25th May on the Regulation of Electricity Production through a Special Feed-in System ("Régimen Especial") directly promotes the generation of electricity from renewable energy sources. According to RD 661/2007 the premiums and fixed tariffs are no longer coupled to reference electricity price, as was the case before this RD. Besides, in case of premium, a cap and floor has been introduced per category of renewables. The floor is the lowest level of premium plus electricity price, and the cap is the maximum electricity price to where a premium is still paid. This new system protects the promotor when the income derived from the market price is too low, and removes the premium when the income is high enough to ensure breaking even.
The new system conserves the operator’s choice between a set feed-in tariff and a bonus added on to the market price. According to RD 661/2007 for onshore wind the feed-in tariff is 7.32 c€/kWh for a duration of 20 years, with the feed-in tariff then decreasing to 6.12 c€/kWh. In the “bonus + market price” system, the decree introduced a lower limit price of 7.1275 c€/kWh and an upper ceiling of 8.4944 c€/kWh, and this in order to prevent any unjustified allowance for wind power. In the case where the market price reaches the upper ceiling price, the bonus (2.9291 c€/kWh for the first 20 years) disappears. For offshore wind the bonus is 8.43 c€/kWh with a maximum cap of 16.4 c€/kWh. The premium tariffs are paid on an hourly basis. The amounts of tariffs, premiums, supplements and cap&floor limits will be annually updated having the consumer price index (CPI) as a reference minus 25% until the 31st December 2012 and minus 50% in the period following this date. Besides, during 2010, in view of the results of the follow-up reports on the degree of fulfillment of the targets set out in the national “Renewable Energies Plan (PPER) 2005-2010” as well as the new objectives included in the following national Renewable Energies Plan for the period 2011-2020, the review of tariffs, premiums, supplements and cap&floor limits will take place, bearing in mind the costs associated with each of these technologies, the extent of participation in the special scheme in meeting the demand and its effect on the technical and economical system, always guaranteeing reasonable profitability rates with reference to the price of money on the capital market. After that, every four years a new revision will be done, maintaining the criteria above.
The new target for the wind energy sector is an increase in output of 12 000 MW over the period 2005-2010. This implies ending the decade with a total installed potential of 20 155 MW. It must be noted that Spain does not yet have any offshore wind farms. There are a number of ambitious plans for offshore wind farm but it is considered unlikely that these projects will be developed during the period 2005-2010.
Modification of the Royal Decree 1614/2010
Notice :
The following explanations of the « Legislative changes concerning (on-shore) wind power technology » due to RD 1614/2010 legislation came from a Clifford Chance publication. (source : Clifford Chance S.L. December 2010 Client briefing)
Royal Decree 1614/2010, dated 7 December 2010, which governs and modifies certain aspects of electricity generation activities which use solar thermoelectric and wind power technologies, entered into force on 9 December 2010 ("RD 1614/2010").
Legislative changes concerning (on-shore) wind power technology:
A) Temporary reduction of premiums
1. Between 1 January 2011 and 31 December 2012, the reference premium for those plants subject to Royal Decree 661/2007 will be reduced by 35%. This reduction does not apply to those plants subject to the First Transitional Provision of said Royal Decree.
2. After 1 January 2013, the values of the premiums established in Order ITC/3519/2009, dated 28 December, updated according to Article 44.1 of said Royal Decree, will apply to all plants to which Royal Decree 661/2007 applies.
B) New calls for the registration in the remuneration pre-assignment Registry
1. Until a capacity of 300 MW is reached, those plants which obtained their (provisional or definitive) start-up certificate prior to 1 May 2010, and which at 9 December 2010 were not yet recorded at the remuneration pre-assignment Registry, may choose ␣by request, if made before 9 February 2011- between one of the following two options:
a) Sell the net energy produced, receiving the pool market price for it until 31 December 2011, and as from 1 January 2012, sell its energy in accordance with option a) of Article 24.1 of Royal Decree 661/2007 (sale at regulated tariff or equivalent premium), receiving the compensation indicated in said Royal Decree for it; or
b) Sell the net energy produced, receiving the pool market price for it until 31 December 2012, and as from 1 January 2013, sell its energy in accordance with option b) of Article 24.1 of Royal Decree 661/2007 (pool plus premium), receiving for it: the values of the premiums established in Order ITC/3519/2009, dated 28 December, updated according to Article 44.1 of said Royal Decree.
2. A capacity target of 600 MW is established for those plants located in the Autonomous Region of the Canary Islands, to which the economic regime set forth in Royal Decree 661/2007 will apply, although they will only be permitted to sell the net energy produced in accordance with option a) of Article 24.1 of said Royal Decree.
C) Limit on the number of equivalent hours of operation which are entitled to equivalent premium or premium
1. A limit is placed on the number of equivalent hours of operation of wind power technologies which are entitled to equivalent premium or premium, with "equivalent hours of operation" being understood as the ratio between the net annual production in KWh and the nominal capacity of the plant in KW.
The values indicated in the table above will not be revised during the operational life of those plants definitively recorded at the Administrative registry for energy generation plants subject to the special regime ("RAIPRE") by 7 May 2009 and those recorded at the pre-assignment remuneration Registry, pursuant to the Fourth Transitional Provision of Royal Decree-Law 6/2009, which fulfil the
obligation established in Article 4.8 of Royal Decree-Law 6/2009.
2. For on-shore wind farm technology plants, the number of equivalent hours of reference will be 2,589 hours/year when, in one calendar year, the average number of annual hours of operation of all of the on-shore wind farm technology plants definitively recorded at the RAIPRE, not considering those which may have undergone a substantial modification after 9 December 2010, exceeds 2,350 hours/year. If said 2,350 hours/year are not exceeded, no limit will apply.
These reference values for equivalent hours per year will not be revised for those wind farm technology plants definitively recorded at the RAIPRE by 7 May 2009, nor for those plants recorded at the pre-assignment remuneration Registry pursuant to the Fourth Transitional Provision of Royal
Client briefing
Decree-Law 6/2009 and which fulfil the obligation established in Article 4.8 therein, which will not be substantially modified during their operational life.
3. If the plants exceed the limit established on the number of hours of operation, they must refund all excess amounts received within 3 months as from the date they are requested to do so by the Spanish Energy Commission (Comisión Nacional de Energía) (« CNE ») method for calculating the number of hours and the procedure for compensating or refunding amounts will be governed in Circulars issued by the CNE.
D) Review of tariffs, premiums and lower and upper limits
Notwithstanding what is stated above, regarding those plants subject to Royal Decree 661/2007, the review of tariffs, premiums and lower and upper limits referred to in Article 44.3 of said Royal Decree will not affect those plants definitively recorded at the RAIPRE by 7 May 2009, nor those which would have been recorded at the remuneration pre-assignment Registry pursuant to the Fourth Transitional Provision of Royal Decree-Law 6/2009 and which fulfil the obligation established in Article 4.8 therein.
E) Trial period
Under certain conditions, the plants recorded at the remuneration pre-assignment Registry in any phase after the first will be able to discharge electricity during a nine-month trial period, prior to 1 January of the phase with which they have been associated (exclusively receiving pool market price during said trial period).
End of the Clifford Chance briefing