The Spanish government has now confirmed the country's reduced feed-in tariff rate, which will be paid to new solar-power projects. Ground-mounted plants' tariff will be cut by 45% while residential rooftop systems will be paid 5% less than before. All existing installations will receive the tariff quoted at the time of connection, for the full period of 25 years.

Prime Minister Jose Luis Rodriguez Zapatero has made the changes in a bid to restrict power prices and to boost industrial competitiveness and consumer spending. The cost of delivering electricity to Spanish homes has exceeded the revenue from consumers every year since 2005, with the accumulated deficit forecast to reach €14.6 billion (US$20 billion) by the end of 2010. It is the subsidies for renewable energy which account for a sizable portion of the tariff deficit, which the government is now legally obliged to eliminate by 2013.

While the existing installations will continue to receive their set rate for 25 years, the government is likely to restrict the number of hours during which existing generators may earn above- market prices.

The Ministry's press release revealed that the cuts for new plants will reduce the costs of the Spanish electricity system by about €600 million over the next three years.

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