Spanish government to power producers: pay up

In future, producers of electricity in Spain will pay a six per cent tax. That also goes for operators of renewable energy power plants.After months of uncertainty and speculation, the Spanish Council of Ministers has put forward a bill creating new energy taxes to address the multibillion-euro energy sector deficit. The Minister of industry José Manuel Soria explained that power generation, regardless of the source, would be taxed at a rate of 6%. For producers of renewable energy, this is essentially a tax on the feed in tariff. The new tax is expected to raise €570 million in revenues in 2013 from producers of conventional energy, and €680 million from renewable energy sources.

Piet Holtrop, a renewable energy specialist at the law firm Holtrop S.L.P Transaction & Business Law, predicts a wave of insolvencies, particularly among operators of photovoltaic plants. "For many producers of solar power, this will be the coup de grace because it is not profit that will be taxed, but rather total revenue, which has already seen massive cuts following recent reforms. Operators will scarcely be in a position to fulfill this additional requirement." Nevertheless, the photovoltaic tax is lower than the 19% previously anticipated.

The wind energy industry association, AEE, called on the government not only to address the public energy deficit but also to come up with a plan which addresses the current moratorium on new renewable-energy power plants. According to the moratorium, government funding for new wind turbines will end starting in 2013.

Producers of conventional energy will also be taxed according to the new bill. In addition to the six per cent tax, nuclear power plants will be subject to a nuclear fuel tax; large-scale hydroelectric plants will be expected to pay water use surcharges; and fossil fuel plants will be liable for a "green cents" fee. The government's bill is subject to the approval of the Spanish parliament.

Oliver Ristau

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