Royal Decree Law 14/2010 brings radical feed in tariff cut for PV

Spanish photovoltaic industry hit hard by feed in tariff cuts.

As of January 1st 2011 Spanish PV installations will be severely harmed by a limitation in operational hours. Both 661/2007 installations and new installations are affected by Royal Decree Law 14/2010.

Irrespective of the climate zone in which your 661/2007 PV plant is located, operational hours will be limited to 1250, 1644 and 1707 hours per year, respectively for fixed, one axle or two axle installations.

the only ease is, that this limitation will be applicable for the coming three years, and the total time in which FIT can be obtained will be stretched three years as well. FIT is now for 28 instead of 25 years. Recently, the 25+ period FIT at lower rate was already abolished entirely. Any surplus generation of this hours schedule or 28 years timeframe shall be sold at wholesale market at regular market price, or through bilateral contracts.

But we're not there yet: after the aforementioned period of three years things will never be as they were: For all PV installations the hourly profile will be limited to the following profile:

For 661/2007 installations this will be applicable as of the January 1st 2014, after having suffered the hard treat for three years

All Spanish electricity generation plants shall be a network toll of 0,5 €/MW as of January 1st 2011, renewable energy installations are not exonerated from this toll.

661/2007 installations are hit hard by this legislation, which retroactively jeopardizes the project finance of these installations. Some installation may not be able to generate enough cash flow to meet their obligations with senior lenders. These projects need financial restructuring, or will move to the balance sheet of their senior lenders. If these senior lenders are Spanish banks, an additional problem may arise. This shake-out may cause a winter-sale Spanish PV projects.

The coming weeks we will publish an article on the feasibility of legal actions against the retroactive applicability of this legislation. If you are affected by this legislation, please do no hesitate to contact us.

You can find the law in question here: Royal Decree Law 14/2010