Silence in Spain


December 23, 2011

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Spain’s rampant rollout of renewable energy initiatives – and in particular wind power – has quickly propelled the country to the top of the heap.

And for some individuals and businesses, it’s a period that’s resulted in some serious growth. Iberdrola and Gamesa are of course, two of the most high profile winners, although others haven’t exactly faired too badly either.

This, combined with the knock on investment impacts that have in turn kick started a whole swathe of support services businesses, means that the past few years have been quite the fiesta.

However, following the first policy unveiling of the new right-wing government on Monday, all this looks set to change.

So far, there’s been no official word on renewable energy – or indeed energy in general.

However, with the major utilities having stepped up the pressure on the incoming government to tackle a deficit of over 20 billion euros – something that they’ve accumulated on their balance sheets since they were obliged to cover the short term cost of state-backed subsidies before increased consumer pricing was supposed to pick up the tab (but never did…) – change is coming.

And while the outgoing socialist government reached a deal last year to begin to tackle this tariff deficit – paying back the debt to the utilities through the sale of state-backed government bonds – the fact remains that any future investment in wind energy will be perceived as a costly initiative.

And that, in short, is a shame.

While for the likes of Gamesa and Iberdrola, they’ve largely protected themselves against the shortcomings of their domestic market through expansion overseas, it’s a development that will do little for Spain’s economic and energy security woes.

Indeed, with the new government having previously expressed an interest in developing further grid connections with France, in developing existing gas pipeline agreements with North Africa and with introducing further tax changes to nuclear activity, it would appear that renewable energy will be shut out in the cold.

For a country that was for so long bought into a clean energy future, the policy changes and politics demonstrate how quickly such sentiments can change.

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