Concentrated Solar Power Industry in Spain and Tariff Deficit

Response to public consultation on behalf of the Government of the Nation. 42% of the amount cut the accumulated deficit and 58% would be the result of the lowering of the annual deficit.

The savings would be much higher if we consider the excessive profits obtained by nuclear and large hydro, estimated at 50,000 M€ since the system of ‘pool’ was established.

Protermosolar, the Spanish association of solar thermal industry, has proposed to the National Energy Commission (CNE) eleven actions whose implementation will make up a reduction of 17,300 million euros of tariff deficit. This plan has been developed in response to public consultation by the CNE on behalf of the Government of the nation and to seek solutions to this problem of the energy sector, according to Protermosolar it’s not attributable at all to the renewable energies, as some want to make see to the public opinion, but they have contributed to the reduction of the prices in the primary market of electricity.

The reduction of the deficit would be even greater with this plan addressed by Protermosolar if we remove excessive profits by generating electricity in nuclear power plants and large hydro, a cut according to the Supreme Court’s doctrine on the "rational benefits "and with which they were justified in the past certain actions on some renewable energy.

Quantification of these excess profits could be made from the findings of a report from the CNE itself, from May 2008 on generation costs of different technologies and matching consulting studies conducted thereafter, the result would be a figure in excess of 50,000 million euros since the establishment of system of ‘pool’ and more than 20,000 million from the recognition of the tariff deficit figure.

In summary, the proposed Protermosolar the CNE are two main types of actions, with the following savings:

A) Actions to cut the accumulated deficit:

1) Apply some cut to the tariff deficit based on the theory of the Supreme Court of “rational profits” for the ‘windfall profits’ from previous years. Amount to be determined.

2) Make the adjustment and final settlement of the costs of transition to competition pending. Estimate: 3000 million.

3) Require the return of allowances that utilities have received freely in successive years since 2005 and have been internalized in the price of the pool. Already demanded the return of certain annuities (2006, 2007, 2008 and 2009-H1), which presumably will have been entered, but could not be clearly seen in the data provided on the deficit. By requiring the missing 2005 and from the 2nd half of 2009 to date. Estimate: 4,200 million.

B) Actions to reduce the annual deficit

4) Lower the compensation to nuclear power plants and large hydro, both fully amortized, and whose generation costs are much lower than the price of ‘pool’. Estimate: 3,000 million euros per year.

5) Review the regulated distribution costs by requiring higher levels of efficiency and therefore cost reduction. Estimate: 500 million euros annually.

6) Remove interruptibility payments for large consumers, it’s not necessary as there is installed overcapacity. Estimate: 500 million euros a year. (Currently charged on the order of 5000 million)

7) Reduce capacity payments to the combined cycle and hydro. Estimate: 300 million euros annually.

8) Remove the supports to domestic coal, which are the cause of the shift in the emission reduction commitments, and pass the State Budget other support to the 4000 workers in the mining sector. Estimate: 500 million euros a year.

9) Move to the State Budget all costs which can be described as "social support" as the out of the mainland costs, the social bond, the subsidies to Elcogas, the nuclear moratorium, and so on. Estimate: 1300 million euros per year.

10) share the responsibility with other energy sectors of the necessary transformation of the electricity sector to fulfill the objectives set by the EU Estimate: 3000 million per year.

11) Set as incomes to the system a portion of the auctions of emission rights for power generation from 2013. Estimate: 1000 million per year.

We estimate that these actions would solve the whole deficit problem and would promote the gradual penetration of renewable energies and would decrease the subsidies progressively to meet the grid parity. Renewables are not the problem but the solution that can help Spain overcome the crisis by attracting private investment, increase the GDP, create jobs, reduce fuel imports and vulnerability of our economy and, ultimately, contribute significantly to reducing the budget deficit. If all these actions were implemented, all the costs could be included at the final bill, and therefore, we never again would incur in tariff deficit.