Tariff changes, taxes hit Spanish biomass
February 26, 2013
By Argus Media
February 26, 2013, Perpignan, ES — Spanish biomass-fired power generators are starting to feel the impacts of government changes to feed-in tariffs (FITs) and proposed taxation increases. Planned projects are being cancelled and the country's biggest biomass-fired generator, Ence, is laying off workers.
Ence, which operates 230MW of biomass-fired combined heat and power (CHP) plants in the country, will reduce staff numbers by 144, around 12pc, because of “unexpectedly harsh” changes in FITs passed on 1 February. The workforce cuts raise questions over the firm's plans to build another 160MW of biomass-fired generation capacity in Spain.
A further two biomass projects, both in the central region of Castilla and Leon, are being abandoned despite passing through lengthy planning processes. One was a 15MW unit planned for the town of Santa Maria del Tietar, to be built by local renewable energy company Daldur, which had been in planning stages since 2009 and had environmental permitting. The other was a 15MW unit at Mombeltran, originally scheduled for start-up in September 2012.
Local lawmakers cite the modification of Spanish FITs, and a 7pc tax on power generation passed in December, with smaller operators saying they will find it difficult to pass on the increased cost to consumers.
The FIT changes will cut the link between tariffs and the consumer price index (CPI), which will lower tariff rate rises. And they will stop generators from selling power at the market price plus a premium, instead reducing the option to a simple fixed tariff of 7-13¢/kWh, depending on plant age and capacity.
The biomass industry has “a double problem with the new provisions”, according to the president of the country's renewable energy association, Jose Villarig. “It has a series of continuing costs that will be linked directly to increases in the CPI, such as transport, manual labour and raw material prices. But now it will be unable to see the price of its product updated accordingly.”
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