The new Spanish government has approved a Royal Decree-Law to support renewable power plants that were affected by the energy reform of 2013, when feed-in tariffs (FiTs) were removed retroactively.
Facing a swelling tariff deficit (soaring electricity costs, mainly due to the rising weigh of the renewable surcharge, and regulated end-consumer rates), Spain decided to suspend FiTs in 2012 and to remove them in 2013 (Law 24/2013). FiTs for existing plants were capped in 2013 (return rate capped at 7.5% over the plant's lifetime, plus 7% tax on income (suspended for 6 months in September 2018)). Producers had to sell renewable power at market prices on the wholesale market without any priority dispatch. A "solar tax" required PV plants below 10 kW to pay a fixed capacity charge and plants up to 100 kW to inject their power generation into the grid without any compensation; the solar tax was removed in October 2018. The legal changes affected 64,000 renewable power plants, prompting some foreign investors (mainly investment funds) to start litigation against Spain: so far, the country has lost 10 cases (but has not paid the €821m penalty set by arbitrators) and is facing 45 open lawsuits, estimated at around €10bn.
Under the terms of the new decree, investors that abandon litigation will be allowed to maintain the current profitability rate of 7.39% until 2031; the return rate for all other renewable producers will be cut to 7.09% over the 2020-2025 period (5.58% for those outside the Iberian Peninsula).
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