Industry Insight
CSP Legislation: Resounding 'no' vote on repeal of Spain's Royal Decree
16 October 2009
After seven long days of uncertainty and fierce lobbying by Spain’s CSP sector, the Spanish Congress has voted against a new law that threatened future growth prospects.
By Toby Price
On Wednesday 7 October, the Spanish Senate repealed Article 4 of RD 6/2009 under the auspices of a new law regulating listed real estate investment companies. Although, the repeal would have initially cleared the way for developers to move forward with their projects without having to wait for the publication of the registry – thereby resolving the current hiatus in the CSP sector – only 500 MW of new CSP projects would have benefited from the existing FiTs. Spanish CSP industry association, Protermosolar, says the repeal would have had disastrous repercussions for the CSP sector.
According to Protermosolar, funding for remaining projects under development (roughly 1,000 MW) would have dried up. Projects previously covered by legislation (RD 661/2007) could have been exposed to loan cancellations and demands for immediate loan repayment, triggering financial losses in the region of €5 billion (US$7.4bn) for developers, suppliers and investors. In raw figures, Protermosolar estimates that this regulatory change would have threatened 300,000 jobs and €10 billion (US$15bn) in investments.
Amendment overturned
However, for the repeal to stand, the new law had to be ratified by Spanish Congress on Thursday, October 15. After seven long days of uncertainty and fierce lobbying by CSP sector players and political heavyweights in areas such as Andalusia where many CSP projects are located, the Spanish Congress voted by an overwhelming majority not to ratify the new law. Consequently, all renewable energy projects (except solar photovoltaic projects that are covered by specific legislation) will continue to be regulated by RD 6/2009.
Along with many players in the Spanish CSP sector, the Chairman of Protermosolar, Valeriano Ruiz, heaved a sigh of relief that the current legislation will remain in force, claiming that the rejection of the repeal is “a significant success after a lot of lobbying”. Nevertheless, Ruiz warns that the current hiatus will continue.
1,500 MW of CSP projects are currently under construction in Spain, most of which were already put on hold when RD 6/2009 was enacted back in May, and, to date, a total of 4,300 MW distributed across 100 projects have been presented for registration but have still not received approval.
Ruiz is concerned about the effect these delays are having on the CSP sector. “We cannot let our guard down. We have won a small victory, but companies waiting for their projects to be approved are in the same position or even worse off because another week has gone by. The blockage is still in the same place and those who can remove this stop-gap remain the same. We need to urge the Ministry of Industry to take action,” he said.
Ministry of Industry sources consulted by CSP Today have, however, provided assurance that work on the registry of preliminary assignment of remuneration was not affected by the recent u-turn affecting RD 6/2009. In fact, on the same day the repeal was rejected, the Ministry announced that 89 of the 708 renewable energy projects filed in the registry have been approved to date, including 150 MW of solar thermal electric power.
Nevertheless, Protermosolar warns: “The three regulatory changes introduced by the Ministry of Industry in less than two years have created the kind of regulatory uncertainty that could prevent foreign investments in the Spanish market. Many of the projects currently under development are funded by international financial institutions that are following the current situation with disbelief thanks to the unpredictability of the Ministry of Industry.”
Industry calls for more stability
In a communiqué issued this week, the industry association called on the Spanish Government to act. “Companies that have started constructing CSP plants in our country must have a stable and favourable regulatory framework and the individual interests of conventional energy sectors must not impede the development of companies that produce electricity using renewable sources”. He also demanded that “decisions be made after in-depth analysis and consultation with industry experts to avoid awful consequences for the solar thermal energy sector”.
The legislative changes threatened to cause irreparable damage to the investments made to date and to undermine Spain's leadership position in this sector. In this case, the Spanish Government has acted in the interest of the CSP sector by blocking the repeal of RD 6/2009. However Protermosolar stresses that if the sector is to gain ground, the Ministry of Industry must move forward on approving the remaining registered CSP projects and that a more stable regulatory framework is needed.
