Proposed amendments to RDL14/2010

Yesterday, on January 26th 2010, the Spanish Congress voted in favour of the ratification of RDL14/2010. This very poor and hastily conceived piece of legislation was approved in a session with evenly poor arguments in favour. To mask their embarrassment, the congressmen of PNV and CIU, the nationalist parties of the Basque Country and Catalonia proposed a series of amendments. However, these amendments were not to form part of RDL14/2010, but of a Law to be adopted later, the Law on sustainable economy. The PP, in a hypocritical move, stated that the matter regulated by RDL14/2010 should not have been regulated in a Law, but in a simple Royal Decree, since it concerns mainly technical matters. However, the PP abstained from voting, thus allowing the ratification of RDL14/2010. How is that for coherence? The only sensible comments came from the minority parties on the left side, and from the Galician and Canarian parties. These parties argued correctly that the entire Spanish Electricity System needs reform for containing inflated windfall profits, and the Canarians added the unfair discrimination of RDL14/2010.

Windfall profits

The windfall profits in the System stem from the Pool system, which is designed in such fashion that all electricity is sold at the price of the most expensive technology. Renewables are sold at zero price and have a downward effect in the pool, Nuclear and Hidropower are sold at the price of Gas, and thus are only cheap for the utilities. These technologies are cheap in production, but nothing of this price effect reaches the electricity consumers. Moreover, in Spain these technologies have already been paid for by the consumers. The owners of these technologies make nice profits. Some

people in Spain call this an obscenity, and I can see why. I will post a thorough analysis of this issue, together with an analysis of the regulation of the transition of the Spanish Electricity System to free market, in the coming weeks. An advance: the windfall profit of these technologies roughly equal the cost of the feed-in-tariff of Renewables from their first penetration in the system until reaching Grid Parity. That's a lot of money.

The discriminatory effect of RDL14/2010 as mentioned by the Canarian congressperson stems from the poor quality of the regulation: PV plants in high radiation areas and with a more than average efficiency are hit much harder. The Canarian Islands are in a very nice radiation zone: Coordinates: 28°06′N 15°24′W

Now the amendments. RDL14/2010 could have been amended, had CIU and PNV voted in this sense. But they haven't. Instead the amendments to RDL14/2010 are to be included in yet another law. Solve a mess with another mess, they must have thougth.

Here are the proposals:

1. Amendment of the Second Transitory Disposition of RDL14/2010, containing the hour profile for RD661/2007 installations, to 1375, 1808 and 1877 hours instead of 1250, 1644 and 1707 hours, a 10% moderation, but still harshly discriminatory if compared to the limitation of other PV installations.

2. Amendment of the Second Transitory Disposition of RDL14/2010, containing the hour profile for RD661/2007 installations in the sense that the equivalent production hours now refers to peak power instead of nominal power. At least some understanding of the subject matter here. Chapeau. Although... Why is this reference only changed in the cut referring to RD661/2007 installations, and not in the general cut? Just for the record: The senators say Second Additional Disposition, but they mean this one.

3. Elimination of the paragraph 4 of the First Additional Disposition of RDL14/2010, thus not allowing for further modifications of the hour profile of PV installations. In theory.

4. Amendment of the First Final Disposition of RDL14/2010, modifying table 3 of article 36 of RD661/2007 as to change the term of 25 years for installations of type b1.1 to 30 years. This is still mustard after the meal, to put it with a nice Dutch proverb.

5. Inclusion of a new Final Disposition in RDL14/2010, obliging the Spanish Government to elaborate a new radiation map, in co-operation with the Autonomous Communities. This map is to used to determine the retribution for PV projects, at a detail level of at least municipalities. The map is to be elaborated within six months. Given the time this Minister needs to come up with new legislation, I do not have great hopes as with regard to his capacities to meet this deadline. It is the system of RDL14/2010 that causes discriminatory effects, this amendment cannot repair that. More efficient installations will still be hit harder and thus be punished by this system. No amendment can, the entire idea of RDL14/2010 should be redesigned to make it non discriminatory.

6. Inclusion of a new Final Disposition in RDL14/2010, obliging the Spanish Official Credit Institute (ICO) to offer special finance to PV projects before April 30th 2010. These will be available only to SME's and people. Projects financed with money from private equity funds and the like are punished. The finance is to cover a maximum of 25% of the retribution of the installation over 2010, which is too little anyway. If you cut the return of the installations on average 20% during three years, and with a similar amount the years after that, you don't get very far with a loan of 25% of one year's turnover. It is either cynical to do this, or the senators who thought this up really cannot count.

Sounds very nice, but it is still a big mess, and the system of RDL14/2010 remains discriminatory. I would resume this as follows: The Spanish Minister of Industry breaks both your legs, and the senators give you a band aid, you choose for which leg.

We still recommend to appeal against this law invoking the violation of Directive 2009/28/EC.