Spain Renewables Industry Fears Subsidy Cuts
Author: Martin Roberts
Spain's renewable energy industry joined forces on Thursday to ask the government to clarify whether it plans to retroactively cut subsidies, as market-moving media reports have suggested.
Shares in renewable energy generators Iberdrola Renovables and Acciona moved sharply lower on Wednesday after website elconfidencial, citing sources close to the government, said the government could reduce existing subsidies which finance most of the renewables plants in Spain.
New energy sector regulation is due in 2010.
"The posible retroactive application...would jeopardize a sector in which Spain is a world leader and is being touted as a driver to overcome the economic crisis," a statement from Foro de Renovables said.
Foro de Renovables is an alliance formed on Thursday from several renewable industry bodies.
An Industry Ministry spokesman on Wednesday declined to comment on market speculation subsidy cuts would be backdated.
"Subsidies will be cut. It's early days, nothing has been decided or drawn up, although the Ministry has to study all options," he said.
In a research note, Citi said it expected a cut in renewable premiums, mainly for solar power, but not on-shore wind and reiterated its positive view on wind developers.
"Although a retroactive application would not make sense, in our view, given the significant legal/regulatory uncertainty this would cause," Citi said.
In a bid to cut its heavy dependence on expensive imported fuels and greenhouse gas emissions, which are high above Kyoto levels, Spain has generously subsidized renewable energy in recent years.
Spain is now the world's fourth-largest producer of wind power and the second of solar. Renewables provided 12.3 percent of all energy in Spain last year, and the government expects this to meet a European Union target of 20 percent by 2020.
Also on Thursday, renewable energy firm Renovalia said it would join a raft of green companies mooting stock market floatations in Spain with an initial public offering set for May 12.
Other Spanish renewables companies seeking listings include Abengoa Solar, a unit of energy firm Abengoa; solar energy firm T-Solar and private equity Dinamia's Eolia.
Renewable firms traded down in line with the Madrid bourse In mid-afternoon deals.
Iberdrola was off 1.81 percent at 2.98 euros, Acciona declined 2.65 percent to 78.88 euros.
Wind turbine maker Gamesa was meanwhile down 5.6 percent at 9.68 euros, outpacing a 2.14-percent drop by Madrid's leading share index. Abengoa sagged 3.96 percent to 19.49 euros.