Is it really worth taking the plunge in Spain?

This week the Spanish news agency Europa Press reported Spain’s Ministry of Industry, Energy and Tourism was preparing to launch a 500MW wind auction. Isn’t this good news for a country that has essentially been dead for wind since 2012, when the government put a stop to all new developments? Sadly not, it would seem. First, there is the paltry level of capacity involved.

The Spanish Wind Energy Association (Asociación Empresarial Eólica or AEE) points out that 500MW is well below the 4.6GW to 6.5GW of new wind that the Ministry itself recognises is needed to reach the country’s 2020 objectives. In fact, the 500MW is not even solely for new projects, but also covers up-rates and the replacement of old machines.

But what has really upset the AEE is that the Ministry has put together the auction plan without consulting the sector or moving to eliminate some of the regulatory insecurity in Spain’s current energy legislation. It is believed the government is looking to spend €21m on the wind auction, or around €40,000 per MW.

That’s about 60% less than even what was given to the few projects installed in 2013 and 2014, following the abolition of Spain’s feed-in tariff (FiT) system, says the AEE. The Ministry is also assuming wind developers will be able to cut 20% off their capex and 21% off opex, while increasing the number of hours of operation by 52%.

If any wind developer is willing to accept these terms, there are a couple of other points to consider. The first is a practical one. Spain’s current Minister of Industry, Energy and Tourism, José Manuel Soria López, has claimed his government has improved the regulatory security of the energy system by axing FiTs to get rid of a ballooning tariff deficit.

In actual fact, the opposite is true. The most recent energy reform gave the government carte blanche to revise the regulatory framework every six years. That means any incentives agreed with the Government today could be thrown out of the window when the next review comes around, in 2019.

And in scrapping the FiT scheme for existing projects, the ruling People’s Party (PP) has already shown it couldn’t care less about reneging on promises. Even if you are prepared to deal with that bleak prospect, however, there is still a matter of principle.

After single-handedly dismantling Spain’s once-leading wind and solar sectors, the PP holds what is arguably the worst record on renewable energy development of any political party on the planet. And earlier this week it emerged that the party’s regional mandarins had taken bribes to fast-track wind projects when the previous administration was in place.

Now such antics are under scrutiny as the PP faces stiff competition in local elections next month and a general election before the end of the year. It is not unlikely that the planned wind auction represents a last-minute attempt to claw back some environmental credibility ahead of the polls.

But if the auction does indeed go ahead, and that is a big ‘if’ to start with, then any developer stepping forward to take the bait would be giving this administration a vote of confidence that it frankly does not deserve.