MADRID (Reuters) – The Spanish cabinet could approve on Friday a law that will cut renewable energy subsidies as part of a drive to reduce a 30 billion euro ($41 billion) power tariff deficit, built up during years of keeping prices below regulated costs.
The new law, the thrust of which was announced by the government in July last year, set the rate of return for existing renewable energy facilities at 7.4 percent and at 7.5 percent for future operations.
Many renewable energy companies have made double-digit returns on investment under hefty subsidies. Spain has passed a series of measures over the past two years cutting, and in some cases eliminating, renewable energy subsidies and a number of investors have filed international legal complaints.
“(The decree) is ready to go,” Industry Minister Jose Manuel Soria told reporters on Thursday, adding that the decision to approve it at Friday’s weekly cabinet meeting would be taken later on Thursday.
The minister acknowledged the reform was bad news for companies that invested expected higher returns.
According to documents annexed to the reform, to which Reuters had access last week, the government plans to cut renewable energy subsidies by 15 percent this year to 7.63 billion euros.
The new rules will be retroactive to July 2013 and many companies have already made massive provisions and writedowns in their 2013 financial results, anticipating the impact of the decree.
The regulation includes variations for a range of technologies – including wind, thermosolar, photovoltaic and biomass – and the year the assets were installed.
For example, assets installed before 2005 will receive no subsidy and will only be awarded with the wholesale power price, while newer assets will receive the wholesale price plus a separate remuneration.
(Reporting by Jose Elias Rodriguez, writing by Tracy Rucinski; editing by Julien Toyer and Keiron Henderson)