Spain takes some of the wind out of its clean energy sails

Age
Monday 4/12/2006 Page: 3

Madrid: Spain is to cut subsidies to windpower plants following an overhaul of the way it calculates aid for renewable power sources, hurting earnings at utilities including lberdrola SA, the world's largest producer of wind power.

Electricity from wind will be paid between 67 ($A112) and 84 per megawatt hour starting next year, down from about 97 this year, Spain's secretary of state for energy, Ignasi Nieto, told reporters on the sidelines of a conference in Palma de Mallorca.

Rates will rise for solar and biomass plants as well as for co-generation sources that generate power and heat. "Wind-power subsidies were exaggeratedly high, especially since the technology has developed in the last few years and costs have fallen," Mr Nieto said.

Spanish subsidies for wind power in the past eight years have helped it become the world's second largest producer of wind power after Germany. Spain is trying to curb the emission of carbon dioxide, the gas blamed for global warming, while meeting soaring demand for electricity as its economy grows faster than the European average.

Overall, Spain will devote 1.8 billion a year until 2010 to subsidising wind power, 50 per cent more than this year. Solar power subsidies will almost double.

"The new rates will not mean less wind parks are built because they will still be making more money that they were a few years ago," Mr Nieto said. The Government plan has been sent to energy industry regulators for review.