The Spanish government may impose temporary taxes or caps on earnings on renewable energy plants as it tries to reduce state spending, according to Standard & Poor’s and Banco Bilbao Vizcaya Argentaria SA. (BBVA)
The country, which halted subsidies for new renewable energy projects on Jan. 27, could take “adverse” regulatory action against existing plants including taxes if the economy deteriorates further, the ratings company said yesterday in a note to investors.
Spain is reviewing the rules governing its energy industry to rein in 24 billion euros ($31 billion) in power-system borrowings backed by the state and curb its budget deficit as it grapples with an economic crisis. The debt is compounded in part by the more than 7 billion euros paid each year since 2010 in premiums to clean energy producers.
Spain’s second-biggest bank expects the government to take additional steps to restrict profits for the renewable industry on top of the moratorium on state funding for projects not already approved.
“We expect further measures to be included in the final regulatory review,” Isidoro del Alamo and Daniel Ortea Hernandez, utility analysts at the Madrid-based bank, said in a note last week. “We think some retroactive measures could be applied even if the principle of reasonable remuneration - that allows some profitability - is honored.”
Measures are likely to include making projects opt for fixed tariffs instead of premiums on top of wholesale prices, they said, a move that would limit potential earnings.
Solar thermal power plants could see their subsidized hours of operation capped for about five years, according to the bank. The cap would be compensated by an extension to subsidized years so overall profitability would not be affected.
In January 2011, Spain approved a similar temporary cap for photovoltaic plants built from October 2008.
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