Spain suspends power subsidies to reduce deficit

• 12 years ago (2012-01-28)
• Junior Isles

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The Spanish government has suspended subsidies for new renewable energy projects as part of its efforts toward a deficit reduction strategy.

The government has passed a decree that will halt subsidies for new wind, solar, cogeneration or waste incineration plants as it hopes to limit its energy policy expenses, which reached €24 billion ($31.6 billion) at the end of last year, Spanish Industry Minister Jose Manuel Soria said.

“What is today an energy problem could become a financial problem,” Soria said at a recent press conference in Madrid.

Spain's power market built up debts from the previous government’s overgenerous power subsidies and failure to balance revenues from state-controlled prices with the real cost of delivering power.

Today's decision is a “first step” toward reining in the debts of the failed energy policy and officials are working on a broader package of measures, he said. The government is not planning to impose a levy on nuclear or hydropower plants and nor will it take on existing liabilities, he added.

The total capacity of Spanish power plants is currently about twice the country's peak power demand. There is a boom in investment in solar panel installations and combined -cycle gas-fired plants, while the country is also exceeding its targets for clean power production, Soria said.

“We don't have a problem of production, generation, or capacity,” he said. The government “continues to back renewable energy,” and aims for a “balanced mix” of energy sources, he added.

The suspension will not be retrospective and consequently will not affect existing plants or projects that have already been approved for subsidies by the government, Soria confirmed.