A bill in Spain to recoup revenue from emission-free power plants would create risks for investors in renewables and favor fossil fuel generation, trade groups have urged the European Union (EU) to intervene.
The bill “seriously undermines investment incentives” for decarbonized electricity generation and “reduces commercial revenues for some non-emitting companies”, wrote AELĒC, Eurelectric, the European Federation of Energy Traders, the Global Infrastructure Investor Association and WindEurope in a letter sent to the EU last week.
The Spanish government has relaunched the legislative procedure on the bill for a new regulation of the electricity market which will reduce the income of non-CO2 emitting production facilities installed before 2003.
According to the letter, the objective of the mechanism is to contain, in a permanent way, the impact of the increase in the price of CO2 emission allowances on Spanish consumers by recovering the “excessive income” that would have been received by certain installations. non-CO2 emitters.
Signatories to the letter said the European Commission should enter into talks with the Spanish government and raise concerns about a draft law “which is contrary to the EU framework, including the various communications from the Commission, which aim to encourage…decarbonisation, guaranteeing legal certainty and stability for investors”.
The letter noted that investments in solar, wind and storage are happening because companies believe they can get a fair return. Spain’s proposed measure “fundamentally undermines this investment incentive and creates additional risk for investors”, trade bodies said.
They added that the proposed law goes against the REPowerEU plan, which states that windfall profit measures should not affect the carbon price signal of the EU emissions trading system.
The news comes after the Spanish government last year introduced a mechanism to limit windfall profits from certain renewable energy plants.
According to the letter, the coexistence of the previous measures with the new bill “would structurally harm non-emitting production whose costs are already increasing”. Trade bodies said this “would have the effect of favoring fossil fuel-based electricity generation”.