solar industry in Spain: new decree of september 2008 related to power polant feed-in tariffs and premiums

SPAIN & PHOTOVOLTAIC POWER:

The Royal Decree 1578/2008 of September 2008 concerning the new economic model applied to electricity produced by photovoltaic solar panels

Royal Decree 1578/2008, approved on September 26th 2008, will apply to photovoltaic facilities registered after September 29th 2008. This decree was adopted while the development of wind farms in Spain has accelerated, exceeding government targets. The goal set for 2010 (371 MW installed) was reached in August 2007 and should be exceeded fourfold in 2008. The aim of the new Royal Decree is to reach a production capacity of around 3,000 MW of electricity via photovoltaic solar panels in 2010 and around 10,000 MW at the beginning of 2020. The Royal Decree specifies the scope of photovoltaic installations that can benefit from this new "special regime" by:

creating a distinction between installations on the ground and rooftops, with a subdivision for the latter, depending on whether their power is less or greater than 20 kW
limiting the maximum electric power of each installation to 10 MW on the ground and 2 MW on rooftops.

Above all, the Royal Decree:

sets up a single pre-allocation register for projects that wish to benefit from this special regime and an inspection system for the them
organizes a proportional system for capacities that can benefit from the special regime by type of installation
sets the top remuneration level for electricity produced by each type of installation and adjustments over the coming years

Let us take a closer look at the three new measures in the Royal Decree.

To benefit from the special regime outlined in the Royal Decree, and particularly the remuneration rates, photovoltaic projects must be listed in the single "pre-allocation" register. This listing, a prerequisite, opens the right, exclusively during the corresponding trimester, referred to as the "convocation", to benefit from purchase tariffs for the same and unique period. Requests to be listed in the pre-allocation register must be addressed to the Directorate General of Economic Policy and Mines of the Ministry of Industry, Tourism and Trade. The first requests must be formulated between October 15th and November 15th 2008, for the convocation in the first trimester of 2009, and between November 16th and January 31st 2009 for the convocation in the second trimester of 2009. At the same time, the Royal Decree sets up an inspection system that will be organized by the State General Administration (AGE) and the National Energy Commission, which regulates the Spanish energy system, on a periodic and random basis.

For each convocation, every trimester, basic quotas will be determined for each sub-type of installation (see chart). For the year 2009, the quotas are:

-240.3 MW for installations on the ground and rooftops greater than 20 kW

-26.7 MW for installations on rooftops less than 20 kW

Each type and sub-type within each convocation during the year will be allotted one fourth of these basic annual quotas. However, from one year to the next, the basic quota for each type and sub-type of installation will be increased or reduced in accordance with increases and decreases of tariffs. The basic quota of a given convocation will be increased, in particular, by an additional share corresponding to the share of the quota of the previous convocation that was not covered by the capacity registered for the said convocation.

Finally, the Royal Decree sets maximum remunerations for the electricity produced that remain attractive for 2009: -32.0 c€/kWh for installations on the ground -32.0 c€/kWh (power under 20 kW) or 34.0 c€/kWh (power greater than 20 kW) for rooftop installations.

We should note that in 2008, while France was behind in terms of power installed compared with 30 MW of installations connected and 11 MW of autonomous installations in 2006, photovoltaic electricity was repurchased for a higher price in Spain (at 31.2 c€/kWh for contracts signed in 2008) except when the installation benefitted in France from a bonus for integration in a building (the repurchase rate is 57.2 c€/kWh and exceeded the Spanish rate). By promoting large rooftop installations, the Royal Decree intends to privilege the technology with the most economic and environmental advantages: reduced investment in connection to utilities networks, preservation of the soil and the environment, etc.

Nevertheless, to force operators and developers in the sector to be more competitive the Royal Decree sets lower remuneration levels for 2009. The tariffs for each photovoltaic installation type and sub-type will be adjusted each trimester according to a formula that takes into account, in particular, the coverage of quotas in the previous convocation by the capacities recorded for the photovoltaic projects listed in the pre-allocation register for the pervious period.

Author: Olivier Choffrut

olivier(-at-)zelya.com

Link to articles and laws published on the CNE website (in english)