Spain axes solar power subsidies again

Madrid made an unpleasant Christmas present to solar power investors in the country, as it plans to cut subsidies for photovoltaics (PV) by about 30% from last year’s EUR2.75 billion (USD3.64bn).

(December 29, 2010 – ADP News Renewable Energy Track) — Madrid made an unpleasant Christmas present to solar power investors in the country, as it plans to cut subsidies for photovoltaics (PV) by about 30% from last year’s EUR2.75 billion (USD3.64bn).

As part of a law aimed at reducing the cost of power, Spain is targeting savings of EUR4.6 billion over three years. Besides photovoltaics, the country also plans to temporarily reduce wind power subsidies, Reuters reported. Also read: Solar power falters in Spain: Is this lights out?

The biggest concern for investors in the EUR-20-billion worth solar power industry, including many foreign private equity firms and investment funds, is the potential imposition of retroactive cuts on facilities built before 2008.

Such a move would be an open violation of long-term contracts and will practically drive many of them into bankruptcy and loan defaults that would hit the banking sector too, Juan Laso, president of the country’s Photovoltaic Business Association, warned.

(Report authors calculate EUR 1=USD 1.308)

Copyright 2010 AII Data Processing Ltd. All Rights Reserved. ADP News Renewable Energy Track

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