Spain to tax renewable energy

Yet another unwanted consequence of having subsidies in the first place.

First the Spanish Government encouraged a “renewables boom” by providing feed-in tariffs which were obscenely generous (about 4 times higher than the going rate) and irresistible to developers.  This was only one of the many acts of profligacy which has led to the current crisis.

And now the Spanish Government is to try and redress the balance by imposing “a levy to spread the expense of closing a gap between costs and revenue in the country’s electricity business, which has racked up debts of 25 billion euros” . Since the largest gap between true cost and revenue is of course with solar and wind plants they will be hardest hit by the levy.

Bloomberg:

Mariano Rajoy’s pledge to tax utilities and power consumers signals Spain is planning to raise cash from renewable energy for the first time, a blow to an industry already struggling with subsidy cuts.

The prime minister told Parliament yesterday he’d impose a levy to spread the expense of closing a gap between costs and revenue in the country’s electricity business, which has racked up debts of 25 billion euros ($31 billion). Details may be announced as early as tomorrow after the weekly Cabinet meeting.

Extending the treasury’s net to cover wind and solar power is part of Rajoy’s 65 billion-euro austerity package aimed at curbing the deficit. Fund managers from HSBC Holdings Plc (HSBA) to Deutsche Bank AG (DBK) and developers are lobbying the government to restrain the scale of the taxes, saying higher fees may tip companies into bankruptcy.

“The new taxes that are being considered are astronomical,” Miguel Salis, chief executive officer of Eolia Renovables SA, a Madrid-based wind and solar farm developer. “They represent 9 percent to 20 percent of gross revenue for these plants, which would create several problems, including many solar plant defaults.”

Industry Minister Jose Manuel Soria has said he’ll issue an energy strategy covering nuclear and renewable power as well as the so-called tariff-deficit gap by the middle of this year. The final Cabinet meeting before the summer recess is July 27.

Shares in most Spanish companies with large clean energy interests fell today. Solaria Energia y Medio Ambiente SA was down 4.9 percent, Iberdrola SA (IBE) fell 3.5 percent and Abengoa SA (ABG) dropped 1.4 percent at 11 a.m. in Madrid. …… 

Photovoltaic and solar-thermal power plants, which earn a tariff as much as five times higher than wind, would be the worst hit by a tax on revenue. There are about 4,300 megawatts of PV capacity and almost 1,600 megawatts in solar-thermal power in Spain, official figures show.

There’s about 40 billion euros of wind and solar power- related debt in Spain, most of which is owned by local banks, …….

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