Feed in tariffs, oil prices and nuclear security; a summary of recent Spanish FIT developments in the PV sector.
The Tsunami following last Friday’s quake was, for Nuclear power in Japan, what the Feed in Tariff cut of last December has been for Photovoltaic Power in Spain. The irony of the situation is that since the Spanish FIT cut, both the situation in oil prices and nuclear security are prompting many a commenter to have a closer look again at renewable energy. It seems that we actually need a long term event to happen in order to be prepared for its negative impact. That was not the idea behind contingency policy, was it?
This article was also published on www.solarplaza.com, and is to serve as an overview of the recent developments in the Spanish PV sector.
Legislative process
On Christmas Eve 2010, two Spanish gentlemen prepared a gift to their PV sector. These gentlemen were Senores Pedro Marín & Miguel Sebastián, the two politicians in charge at the Spanish industry department. Their gift consisted in a feed in tariff cut of around 30% for power plants using photovoltaic technology. The cut was to be applicable to power plants which had obtained their authorizations before the date of the cut; that is to say, with retroactive effect.
The cut was introduced through a Royal Decree Law, RDL14/2010, which is a legislative instrument that requires ratification in parliament. The ratification took place on January 26th 2011, and from that moment on L14/2010 has been applicable and is now Law14/2010. After the ratification process was completed, an effort was made on two different occasions to smoothen the feed in tariff cut. The idea was to introduce amendments in L14/2010 through another law with sufficient level of hierarchy. The voting on these amendments was on February 9th and March 10th 2011. The amendments introducing an alleviation of the cut to 15% didn’t make it, nor did an amendment eliminating the cut altogether.
Last Friday the dialogue between the government and the Spanish PV sector, which had been unilaterally abandoned by the Spanish government in July 2010, was taken up again. CIU and PNV, two regional political parties, are now also attending these talks. Although these parties did not sufficiently support the aforementioned amendments, they support the PV sector in this dialogue. Analyzing the various aforementioned amendments, I think that at the most, as an outcome of this dialogue, a minor softening of the FIT cut is feasible. Damage control of a different nature is more likely to be the outcome.
European Court of Justice
Legally speaking L14/2010 is a mess. For legislative purposes both its methodology and motivation are arbitrary. Moreover, as pointed out before, it has retroactive effect. This arbitrariness and retroactivity will be the basis for lawsuits against L14/2010. The arbitrariness of the mandatory hourly profiles introduced by this law leads to discrimination, which is prohibited under applicable EU law. Retroactivity is not very compatible with the principle of legitimate expectations and legal certainty, as laid down in the case law of the European Court of Justice. European Law is applicable here because the FIT was introduced in compliance with various EU directives in the matter.
The non-discrimination principle is the strongest argument for a court case. Discrimination can be objectively verified, and is prohibited under all circumstances. The argument against retroactivity is trickier because here we are talking about legitimate expectations and certainty. Nevertheless, more complicated does not mean unfeasible.
We have been closely monitoring and publishing on this legislative process, and are currently preparing court cases for a large group of affected PV plants. If you are interested in knowing more about this please have a look here.