Spain to ‘Redouble’ Investment in Clean Energy Projects, Sebastian Says
Spain plans to almost double its wind power capacity by 2020 even as the government faces legal action from investors over cuts in clean energy subsidies, Industry, Tourism and Trade Minister Miguel Sebastian said.
“We are redoubling our bet,” Sebastian told investors during a question-and-answer session at Bloomberg’s headquarters in New York. “We are going to support the expansion of renewable energy.”
Spain is struggling to fund its clean energy targets as the cost of expanding the power grid eats into revenue from electricity bills and the government slashes spending to meet deficit-reduction targets, Sebastian said.
Photovoltaic plant operators are threatening to file lawsuits after Spain cut their subsidies for the next three years in a bid to balance the books.
Under the existing payment system, the government pools revenue from electricity users. After the cost of power has been covered, officials then pay out subsidies to clean-energy producers and regulated rates to distributors. Last year, the power system’s payment obligations exceeded its income by more than 4.6 billion euros ($6.5 billion).
Iberdrola SA (IBE), Endesa SA (ELE) and Gas Natural SDG SA (GAS) are obliged to lend money to the power system to cover the so-called tariff deficit, straining their balance sheets and jeopardizing their credit ratings.
Spain had about 19.4 gigawatts of wind generators connected to its power grid at the end of last year. The government’s renewable energy plan calls for increasing capacity to 35 gigawatts by 2020.
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