Too Many Unresolved Issues For New Spanish Energy Minister

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The structural change made to these premiums by the last government fuelled an avalanche of complaints. At the moment there are over thirty lawsuits for a total cost 5.7 billion euros.

Up to now, there had not even been an approximation made of the total amount of lawsuits in the works, given that in the majority of cases this is not public information. But today, for example, we know that RREEF Infrastructure puts its investment in Spain affected by the reform at 300 million euros, or that CSP Equity Investment has been making a claim for 60 million euros since 2013. The only lawsuit which has been resolved up to now has been in the government’s favour.

As far as gas prices are concerned,  they are amongst the highest in Spain. The tariffs are the third highest in Europe, just after Sweden and Portugal. Compare Spain’s stance with that of the UK where Iberdrola has been obliged to take action against the “threats” made by Prime Minister Teresa May. A few weeks ago she called the tariffs the big energy companies charge the British people “expensive” and unfair. Scottish Power, owned by Iberdrola, is one of these. But chairman Ignacio Sánchez Galán did not have time to go to London and meet with representatives of the conservative government to know what to expect. No wonder Iberdrola obtains nearly 30% of its operating profit from the UK.

Apart from the tariffs issue, the new Energy Minister has to face other challenges like relaunching renewable energy via the well-known auctions. The previous government had planned to invite tenders for up to 4.000 technology neutral MW. Some 1.000 MW would be awarded this year and the rest in 2017. The same race to the bottom bidding system as the one held at the beginning of the year would be maintained.

The first renewables bidding option since 2013 was organised in January and the result was surprising: a 100% rebate in premiums. In other words, the successful bidder commited to not charging more than the wholesale market. But this situation is unlikely to be repeated given that there is complete freedom to buy and sell without a premium, at market prices, without having to participate in an auction.

This new boost for the renewables is happening to ensure Spain complies with the EU directive of fulfilling at least 20% of its total energy needs with renewables by 2020. Reports show that Spain is well positioned compared with other European countries given that in 2015 it generated 92,897 GWh of renewables, 37% of the total.

Then there are other pending issues to be dealt with if the government wants to have the support of the opposition (Ciudadanos and PSOE). These include the thorny matter of autoconsumption, as well as the energy measures Spain needs to implement if it wants to show it respects the agreements reached in Paris on Climate Change.

 

About the Author

Carlos Díaz Guell
Editor at consensodelmercado.com and innovaspain.com, Carlos began his career in financial journalism as founding member of El País. He's been communications director of Bank of Spain, member of the ECC at the European Central Bank, Institutional Relations director at Iberia and editor at La Economía 16 magazine.