Spanish nighmareBleeding Renewable: 20.000 millons of déficit and a ethernal debt (2012-02-25)http://www.libremercado.com/2012-02-25/la-sangria-renovable-21000-millones-de-deficit-y-una-deuda-eterna-1276451172/The bonus system to green energy triggers the cost of electricity in Spain while the debt accumulates to the companies.
Blow up renewable bubble that the government of Jose Luis Rodriguez Zapatero inflated based at bonus will cost dearly Spanish taxpayers. Everyone will have to pay: users, electrical corporations, even many of those who they trusted the executive and undertook significant investments trusting that could then recover the capital promised bonuses.
Thursday, Ignacio Sanchez Galan, chairman of Iberdrola, has used the press conference to present the results of his company to attack harshly a system that has generated a very expensive electricity and tariff deficit that remains shackled to power, which they have to finance the debt that the state requires them to take every month. It has done so full of shocking evidence that force ask what has happened in recent years in Spain, who has made of gold with this and how in a time when the deficit and debt drown government we can afford this outlay.
The originThe problem stems from the different rules that the government of Jose Luis Rodriguez Zapatero was approved between 2004 and 2008. The aim was to promote green energy, mixing the supposed benefits that would bring the "climate change", with the possibility of creating Spain "sustainable" industrial model an example sector of economic modernity. The cost did not matter too: we were in the years of economic boom and the state seemed perfectly able to pay a small annual bill for something that also was very good image.
The method devised for this green energy Made in Spain were the production bonuses. In this way, who put a mill wind power, solar park or a hybrid system would be guaranteed access to the electricity system as a priority. In addition, although the cost of generation was higher than for coal or hydro, the State would bear the difference between the two quantities.
This meant that Spain is filled with fields of windmills and solar farms. The return on investment seemed guaranteed. In fact, the Government assured the payment of these premiums for lengthy periods of time, up to 20-25 years. It was a round, very safe business. Furthermore,
several frauds,
such as solar panels on at night used gas-oil with the aim of taking some more money for production subsidies were uncovered. The green bubble, especially in what refers to solar energy, was already underway
The dataThe first breath of wind that threatened to throw this house of cards came with the economic crisis, which reduced electrical demand levels of 2006. Last year ended with a consumption of 255,179 GWh, similar to that of five years earlier. As the Spanish park was oversized, is not only that production bonuses were high, it was being paid for keeping stops some facilities.
According to data from Iberdrola, conventional production of electricity in Spain is cheaper than in neighboring countries. The company claims that both the pool prices (so called the fixed cost at an auction among the producers of ordinary regime) as compensation networks are about 10% below the EU average.
What it is substantially more expensive renewable retribution. Spain is the EU country with the highest percentage of its electricity production subsidized (between 30 and 35%) and with higher premiums. This is so for two reasons: first, the green bubble has led to a huge expansion of facilities eligible for premium. Secondly, the Spanish renewable mix gives much weight to the more expensive renewable energy.
Renewables are not all equal. For now, all are more expensive than traditional media, but in some cases the costs are approaching the average pool price (61 € / MWh): for example, a wind farm produce at a price of 70 € / MWh; a photovoltaic plant and shooting a little, to 121 € / MWh; but the hybrid costs € 332 / MWh !, six times.
Thus, the joint hydro and nuclear generation was 85,300 GWh in 2011, compared with 9,500 GWh of photovoltaic and hybrid. However, the cost was about the same: 4,400 million euros compared to 3900.
Tariff deficitSpanish consumers do not pay the true cost of electricity. On the one hand, in the case of renewables, the government pays a bonus as the difference between their cost and the price of other sources. But there's the strange concept of the tariff deficit. Even without bonuses, the electricity bill would be very expensive in Spain because of taxes and other indirect costs imposed on companies (which also have their weight aid for renewable). To avoid the cost to the public in a sharp rise in electricity bills, for years it was decreed that power would charge somewhat less to consumers the real cost of the service. The theory was that would gradually closing the gap and the debt would be paid with the companies.
The reality is that the hole is getting bigger. According to the accounts of companies this debt in 2011 amounted to 20,000 million euros. Companies have had to finance this amount, which, according to the president of Iberdrola, has cost more than 1,000 million. Last year, some of this deficit was securitized (debt was issued and, what is raised is paid to power). But there are still 7,000 million in the balance sheets of companies.
Growing debtAll this is generating a growing debt that will have to pay Spanish taxpayers through taxes. On the one hand, there will be companies that pay the tariff deficit: in fact, the titularizarlo, they are already paid, but only in exchange for acquiring a new debt to investors who purchase the corresponding vouchers. On the other hand, will have to pay premiums for renewables. And this amount will not be lower: in fact, will continue to increase.
Although the PP party has eliminated bonus for renewable. Plants already built and registered and continue to accrue bonuses for several decades. For the sake of legal certainty, the Ministry of Industry has not wanted to play as approved by the previous government. And that will make the bill paid each year Spanish is higher. Friday, from free market we estimated that this cost will be around 9,000 million each year (remember that the tax increase decreed by the government last December 30 wants to raise 6,200 million).
The president of Iberdrola, Ignacio Sanchez Galan yesterday called this "bubble" stops, especially in regard to solar power plants, even if are already registered (requested reasonable compensation to those who have made investments, but not raise new deficit plants).
As we said a little above, the cost of producing electricity in the hybrid plants is more than five times higher than the pool. Each kWh produced in these facilities is a stream of money out of pocket Spanish taxpayer. And premiums, increased by CPI, will last at least 25 years. And these plants emit half the CO2 combined cycle and consume lots of water! Come on, who are not even particularly ecological.
According to the accounts of Galan, the discounted cost of bonus and accrued exceeds the sum of the market capitalization of the Spanish electricity companies (more than 100,000 million euros). This is what it costs policy renewable Jose Luis Rodriguez Zapatero and the Spanish will have to continue paying the bill the next three decades.
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