Fight against Spain’s solar cuts taken to Brussels

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A complaint against Spain’s solar cuts has been lodged with the European Commission.

The changes, passed into law earlier this month, will limit the profits of projects to 7.4% before tax, around 5-5.5% after tax. The cap will be periodically reviewed and could still fall further.

Law firm, Holtrop SLP, which represents 1,500 renewable energy investors, delivered the complaint to the Directorate General for Energy at the European Commission on Friday.

The Royal Decree was approved on 6 June, 11 months after it was first mooted. In addition to the investment cap, punitive charges on self-consumption and reforms to the ways payments are calculated were also approved.

“We think that the system is too complex, the standards and parameters which were published on Friday morning are 1760 pages and it is very detailed. It’s delay tactics,” lawyer Piet Holtrop told PV Tech. “It is basically one huge smokescreen to make it difficult to penetrate in court actions.”

Holtrop claimed that the new system was less about energy policy and more about the government dealing with the sector’s budget deficit, thought to be around €26 billion (US$34 billion).

“They wanted to make sure [the changes] lasted at least two or three years during a court action. Either there would be a new government by then or if not, at least they would have postponed the deficit problem for a few years. It doesn’t tackle the real problems of the energy market like restructuring the wholesale market,” added Holtrop.

A number of bodies including the local government of Murcia and Masdar have separately challenged the law. The case with the EC is designed to add pressure on the courts in Spain to act.

Holtrop believes the domestic courts will offer the fastest route to a resolution but that could still take a year in the best case scenario. If proceedings at the EU level were taken to their conclusion, the Spanish government could be compelled to act.

“The Commission can first send a motivated opinion which would prompt the government to introduce changes into the new system. If they won’t do that it can refer the government to the European Court of Justice, if they win that case they can impose a fine that would be large enough to make it more cost effective for Spain to derogate the new system than to pay the fine,” said Holtrop.

By the time that process had been completed, the government could feel that it postponed the previous framework for long enough.

The impact of changes in Spain and the outcome of the court cases against them could reach further into the EU.

“In the new Lithuanian energy tax, Spain was taken as an example. They explicitly referred to Spain and they copied it. There is no deficit and no economic crisis, just a very strong gas sector which stands to lose out to the renewables sector. It’s a dangerous precedent. If we can get this to [European Court of Justice in] Luxembourg and get a positive ruling, it will also have a very positive effect in other jurisdictions,” claimed Holtrop.

The government has also been accused of weakening the sector’s regulator in an attempt to curb future litigation. Towards the end of 2013, Spain folded the energy regulator into one body comprising all competition and industrial bodies. The energy group at the new independent organisation is led by a former advisor of energy minister Alberto Nadal, who pushed through the controversial reforms.

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