Draft law proposes tax on Spanish biomass power

Existing biomass units, including power and combined heat and power (CHP) plants, will be taxed at a rate of 6pc on all electricity produced.

“The reforms are nothing more than an indiscriminate tax levy. Having looked at these proposals over the last 48 hours we understand less and less about them,” the president of the country's biomass association Avebiom, Antonio Gonzalez, said.

The new law is being drawn up as part of a set of reforms after the government suspended all feed-in tariffs for renewable energy projects not already registered on the state's books, on January 27.

Gonzalez cites employment opportunities, the reduction in fire risk through improved forestry management and the cost of fossil fuel importation to the Spanish treasury as some of the wider benefits brought by biomass power. “Lawmakers have failed to recognise this contribution. How can they put so many different generating technologies in one bag? Surely in order to redress any energy imbalance, some sources must increase, some must decrease,” he said.

Spanish energy minister Jose Soria said the government is drafting the law in order to address the country's “tariff deficit” — an imbalance between the remuneration given to power producers, costs borne by distributors and income received from consumers. The current system has created a deficit standing at €24bn ($31.2bn) — held on the books of major utilities, notably Iberdrola and Endesa — and is currently accruing further debt at the rate of €5bn/yr, Soria said.

The government has yet to decide on the future of feed-in tariffs for all sources of renewable energy and will be producing another draft law for that purpose at an unspecified date. But Soria estimates that the 6pc tax on renewable energies with feed-in tariffs from the country's “special regime” will raise between €650mn and €700mn. Figures produced by the country's national energy commission (CNE) on 7 September show biomass power and CHP having 745MW of installed capacity from 181 plants, producing around 365GWh in July. This equates to around 1.8pc of total Spanish electricity demand and a 6pc tax on the share of biomass could place a demand of around €50mn/yr on the industry. The CNE estimates that the final remuneration for producers in terms of tariffs is between €0.00128/MWh and €0.00131/MWh.

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