Spain’s conservative government decreed a moratorium on renewable energy

On January 27th, 2012 Spain’s Ministry of Industry, Tourism and Trade (MITyC) announced that it has temporarily closed the nation’s feed-in tariff (FiT) program, including FiTs for wind energy, photovoltaic (PV) and concentrating solar power (CSP) generation, to new applicants.

The suspension will not affect plants that are already receiving payments or those in a registry of systems for pre-allocation. Spain’s ruling center-right Popular Party had promised an overhaul of the electricity system, and a think tank aligned with the party had suggested that it would cut FiTs. The Popular Party replaced the Socialist Party as Spain’s ruling party in November 20th, 2011 elections.

"The suspension is intended to temporarily curb a reward system that involves costs too high for the electrical system, causing a continuous increase of the tariff deficit," reads a statement from the MITyC. "The measure does not jeopardize the security of supply not meeting the renewable targets with the European Union."

The ministry cites the economic crisis and the deficit of the program as reasons for the suspension, stating that the move is temporary measure while the government reforms the electricity system. The statement also declares that these reforms will create a system where there is no tariff deficit.

The government notes also that the recently passed Renewable Energy Plan contains objectives for 2020 which allow the government a wide berth in designing policies to support renewable energy generation.

This move by the ruling Popular Party follows a record of drastic and at times retroactive FiT cuts under the rule of the Socialist Party. Spain’s FiT led to an explosion of 2.6 GW of PV installed in 2008, before the nation repeatedly cut tariff levels.

Both the program design that led to extremely rapid growth in 2008 and the retroactive cuts have been widely cited as examples of how not to manage a feed-in tariff.

Spain also has a thriving Concentrating Solar Power market and the largest installed solar thermal capacity in the world.

The European Photovoltaic Industry Association has estimated that the nation installed 400 MW of PV in 2011, representing a much smaller market than the neighboring nations of Italy and France. However, due to its CSP capacities and previous PV installations the nation boasts one of the largest cumulative capacities of solar energy generation in the world.