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CSP Today speaks to IHS Emerging Energy Research’s solar analyst in Spain, Josefin Berg, and Marianne Boust, Associate Director, Europe Renewable Power Generation Advisory, about the longer-term impact of a non-retroactive moratorium on feed-in tariffs on Spain’s solar thermal sector.

Interview by Rikki Stancich

At the end of January, Spain’s recently elected  government, the People’s Party (Partido Popular) issued a Royal Decree to temporarily suspend feed-in tariffs for renewable energy generating facilities including wind, photovoltaic, solar thermal, biomass, cogeneration, hydro and biogas.

The latest Royal Decree is not retroactive and does not affect projects that have already secured feed-in tariffs. It does, however, affect all projects that have not yet been entered in Spain’s register of renewable energy and cogeneration projects as of the date the decree was approved.

During a press conference following the meeting of the Council of Ministers, Energy Minister José Manuel Soria (right) explained that the decision, which effectively places a moratorium on the renewable energy sector (which provided 33% of electricity demand in 2011) forms part of a package of measures to reduce Spain’s public deficit.

Last year, feed in tariff premiums totaled €6,400 million. This year they are are expected to reach €7220 million.

CSP Today speaks to solar and renewable energy analysts at IHS Emerging Energy Research to get the longer-term outlook for the CSP sector, both within and beyond Spain's borders.

CSP Today: What is the likely longer-term impact of Spain’s moratorium on feed-in tariffs?

Josefin Berg: In the short-term there won’t be much of an impact given that the pre-assigned projects are guaranteed the tariffs, so most of the larger projects will continue to come into operation. However, the government has provided developers with the option to withdraw projects and recoup their deposit, and as a result we may see some of the riskier projects pull out.

The real impact will be seen from 2013-2016, when no new projects get pre-assigned; there will likely be a gap where there is a lull in construction of new builds.

As we understood it, the government said that it still aims to meet its 2020 target, so it is probable that a new framework will be introduced in 2013. This could lead to further development of renewable energy in Spain, however, it will likely favour wind energy over solar thermal.

The CSP projects pre-assigned now, will get built. But it is unlikely that a CSP scheme will be introduced under the new framework.

CSP Today: Spain has been a key growth market for solar thermal and a proving ground for new CSP technologies. Does this FIT moratorium herald the end of Spain’s CSP era?

Josefin Berg: Yes and no. It has been clear that countries cannot rely on a single renewable energy source, and Spain’s solar market has been unpredictable for some time now. Spain’s CSP players have consequently been looking to new markets in the US and North Africa. Whether these countries can provide the solid basis for growth that Spain has provided until now remains to be seen.

CSP Today: What impact would this likely have on the global CSP market?

Josefin Berg: CSP developers face several challenges, and there are only limited opportunities in new markets such as South Africa, India and North America in the near term.

CSP Today: Is this latest Royal Decree likely to trigger flight from Spain?

Josefin Berg: It depends on whether the government introduces a new scheme – you can’t build a plant without tariffs. And it really depends on the extent to which costs come down.

CSP Today: Is there any evidence that CSP’s costs have come down in recent years and if so, by how much?

Josefin Berg: CSP has not seen the same cost reduction as PV.

CSP Today: You mentioned that the Spanish government would likely back wind energy over solar. What evidence is there that wind is more competitive than solar thermal?

Josefin Berg: In Spain’s current political climate, there is a leaning toward supporting wind developers. It hasn’t always to do with cost competitiveness.

CSP Today: Spain’s government has indicated that it will remain committed to meeting its renewable energy targets. Has there been any indication as to what the new policy framework will look like?

Josefin Berg: A new scheme will certainly have to be put in place if Spain is to meet its targets, however, since the imposition of the moratorium the government has gone quiet on the details of the new legislation.

CSP Today: What will be the likely economic impact of the moratorium on Spain's renewable energy feed tariffs, in terms of foregone jobs / local economic stimulus and foregone renewable energy generation (presumably replaced by fossil fuel imports that are subject to price volatility)?

Marianne Boust: According to the Spanish renewable association, the industry employs directly roughly 50,000 people.

Spain has a significant surplus in installed power capacity given the collapse in economic activity and the resulting lower power demand, and the boom in the past years of new CCGT and wind capacity. Therefore I don’t think Spain is going to be in an import situation in the mid-term. 

For example, during the cold wave, Spain was exporting power to France. We don’t have yet clear view on how much capacity could be impacted. The moratorium only applies to capacity that was not under the pre-registry.

At the moment, there is roughly 10 GW of capacity pre-approved, which are eligible to receive the old tariff. I guess that leaves a gap of another 10 GW to reach the 20 GWs required to meet 2020 RES targets. This capacity will be built if wind, solar and biomass reach grid-parity.

To respond to this article, please write to the Editor:

Rikki Stancich: rstancich@csptoday.com