L R AS Published on Monday 14 January 2019 - n° 259 - Categories:European countries
New pay system in Spain
The renewable energy industry in Spain applauds the new remuneration system
New legislation would allow plant owners to have a guaranteed income for 12 years, until the end of 2031. They can also adopt a formula based on the weighted average cost of capital, which will be reviewed after six years.
These two options are seen as a considerable improvement of the current system. Indeed, in the context of a statutory review that would have taken place in 2019, the so-called "reasonable performance pay" system would have fallen by about 42% from a current nominal rate of 7.39% to about 4.3% from 2020 onwards.
As a result of the economic crisis in 2013, the Spanish government had introduced a so-called "reasonable performance" pay system. The rate of 7.39% corresponded to an after-tax amount of around 5% and this rate was revised every three years. This system provided no visibility to investors. This stopped wind and solar installations in Spain. The country lagged behind other European countries.
Recently, the government proposed an alternative, a rate of 7.39% over 12 years, or a rate of 7.09% based on the weighted average cost of capital and revised every six years.
This alternative is being proposed because the government is facing numerous lawsuits from owners of renewable facilities affected by the termination in 2013 of previous remuneration conditions. The alternative is, however, dependent on the passage of legislation. However, the government does not control the Senate. The owners risk waiting a long time for the law to be voted on unless a legislative election is held, with all the uncertainty that this represents.
GreenTech Media of 11 January
Editor's note The situation seems confused about the remuneration conditions set by the government for power plants built more than five years ago.
In 2019, the situation has changed. Investors are getting around the difficulty by making agreements with buyers, as they no longer need to depend on the conditions set by the government.
The situation should be the same in France, where degree contracts will take place without the agreement of the administrative authorities. At least in principle, because a law can always intervene. But this would call into question the freedom to contract, which is highly unlikely.
