Spain backtracks on solar subsidies as €24 billion debt looms

Facebook
Twitter
LinkedIn
Reddit
Email

Spain has made the controversial decision to cease renewables subsidies for new solar, wind, co-generation and waste incineration plants in the face of an ever-growing government budget deficit of €24 billion. The power-system borrowings have been backed by the state but it appears that revenue generated by state-controlled energy prices has not been covering the high costs associated with delivering power, including the payment of renewables subsidies that have been put in place.

“What is today an energy problem could become a financial problem,” commented Industry Minister José Manuel Soria.

This article requires Premium SubscriptionBasic (FREE) Subscription

Try Premium for just $1

  • Full premium access for the first month at only $1
  • Converts to an annual rate after 30 days unless cancelled
  • Cancel anytime during the trial period

Premium Benefits

  • Expert industry analysis and interviews
  • Digital access to PV Tech Power journal
  • Exclusive event discounts

Or get the full Premium subscription right away

Or continue reading this article for free

With the country’s generating capacity currently at around twice its peak requirements, the country has been slow to react to the explosion in solar- and combined-cycle gas-fired plant-related investments over the years. The subsidies suspension will apply only to newly commissioned solar, wind, co-generation and waste incineration plants and will not affect already-operating plants or projects that have already been approved for subsidies by the government.

“This is shutting the stable door after the horse has bolted,” said Peter Sweatman, CEO of consultant company Climate Strategy. “The risk is that Spanish firms that are recognized global leaders in renewable energy feel their position undermined by lack of domestic support.”

The country’s government is mired in controversy as it attempts to assure investors of its ability to cut the budget deficit to 4.4% of GDP in 2012, down from 8% last year. However, with 23% of its workforce unemployed, this move to cut subsidies is bound to be an unpopular one as the country’s cleantech sector is said to sustain 110,000 Spanish jobs, according to the Renewable Energy Producers Association.

“It’s clear they have to make major cuts,” said Francisco Salvador, a strategist at FGA/MG Valores in Madrid. “The government has already ruled out a significant increase in prices, so the cuts will fall in many places and the spotlight is on renewables, but not just on renewables.”

“It’s a real positive for the developers, the owners of assets, because it removes the risk of retroactive cuts,” said Sean McLoughlin, a renewable energy analyst at HSBC Plc. “The government could certainly have done that again when you think of how much it’s costing them but have decided not to. This suggests that the government is listening to the industry.”

Read Next

October 8, 2025
US solar module prices jumped in Q3 2025 as developers scrambled to meet the 2 September 2025 safe harbour deadline for Investment Tax Credit (ITC) qualification, according to supply chain platform Anza.
October 8, 2025
Despite policy headwinds on the federal level, there is optimism for the future of the US solar and storage sector.
Premium
October 8, 2025
PV Talk: Smart Energy Council's Nigel Morris reflects on how Australia has become a global testbed for distributed solar and storage innovation.
October 8, 2025
Officials from Norway and Egypt have agreed provisional terms for the financing of the Dandara solar park in Egypt, which is being built and operated by Norwegian IPP Scatec.
October 8, 2025
University of Sydney scientists have created the largest and most efficient triple-junction perovskite-perovskite-silicon solar cell on record.
Premium
October 8, 2025
The global energy transition will only be 'marginally impacted' by uncertainties in US energy policy, according to Remi Eriksen, CEO of DNV.

Subscribe to Newsletter

Upcoming Events

Solar Media Events
October 21, 2025
New York, USA
Solar Media Events
November 25, 2025
Warsaw, Poland
Solar Media Events
December 2, 2025
Málaga, Spain
Solar Media Events
February 3, 2026
London, UK