Thursday, October 28, 2010

Spain May Limit Solar Subsidies

Spain may limit the hours during which photovoltaic-power plants may earn subsidies as part of a plan to rein in electricity costs for consumers, according to a government official involved in talks with the owners.

It’s too early to say how much the cut might cost companies that generate the solar power using photovoltaic panels, said Antonio Hernandez, general director of energy policy at the Madrid-based Industry Ministry. He said the ministry aims to reach an agreement during the next few weeks of negotiations.

“We want to prevent electricity becoming more expensive as the sun shines more,” Hernandez said in a telephone interview this week. “One of the possibilities is that the number of hours that subsidies can be earned would have limits.”

Plant operators and trade groups have held talks with ministry officials for months and threatened to sue the government for as much as 1 billion euros ($1.4 billion) should it cut the subsidies. The aid, which is added to consumer bills, is guaranteed for 25 years under a 2007 law, plant operator T- Solar Global SA Chief Executive Officer Juan Laso has said.

Hernandez is searching for a formula to hold down power prices for industry and households as the government tries to revive an economy emerging from its worst recession in 60 years.

The revenue from consumers’ electricity bills doesn’t fully cover the cost of delivering power under the current system, leaving utilities to finance a so-called tariff deficit that’s forecast to total about 3 billion euros just for 2010.

Renewable energy has become the focus of power-rate negotiations as Hernandez tries to meet a legal obligation to eliminate the tariff deficit by 2013.

Spain’s power regulator forecasts that the subsidies to renewable energy-producers plus those to co-generation, which includes more energy-efficient uses of fossil fuels, will reach 6.8 billion euros this year, 15 percent more than forecast, Europa Press reported Oct. 19.


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