UK firm delays Spanish biomass unit on tariff doubts
October 3, 2012
By Argus Media
October 3, 2012, Perpignan, ES — UK-based renewable energy company Eco2 is delaying construction of its first scheduled biomass project in Spain as the country's biomass sector faces viability questions as a result of taxation changes, with decisions on feed-in tariff (FITs) still to come.
Eco2's 40MW plant at Osorno la Mayor in Palencia province has been in various stages of permitting since its application was first presented in December 2008. But the start of construction, scheduled for the first half of 2013, is now on hold, the company has told Argus, putting Eco2 on a growing list of companies that have abandoned, delayed or deferred Spanish biomass projects.
Eco2 says “an anticipated 27-month build process will be set in motion once the tariff process has been outlined by the Spanish government”, pushing any start date into the first quarter of 2015 at the earliest.
The firm has faced a series of delays to the project, with its original construction start date scheduled for the end of 2009. Costs for the unit have risen to an estimated €130mn ($168mn), up from initial estimates of around €100mn, as the sector experiences capital expenditure hikes.
Eco2 received a series of planning and environmental approvals from local and regional lawmakers with consent granted by Osorno council in late 2010. But the firm is maintaining contracts worth €6mn/yr — first signed with local farmers in 2009 — to supply the plant with locally sourced straw feedstock.
The company has a second 40MW plant at Castanares de Rioja, also priced at €130mn, that is still going through local authority planning stages. To assess the viability of both plants, Eco2 will have to wait for the end of a government suspension of subsidies for all renewable energy projects, which has been in place since 27 January. The Spanish government has yet to signal when that end will come.
Eco2's Osorno or Castanares plants have not been pre-registered with the Spanish state's roster to receive the level of FITs in place before the moratorium began.
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