Regulatory and policy options to encourage development of ...

SUSTAINABLE ENERGY REGULATION AND POLICYMAKING TRAINING MANUALpage 9.66The main regulatory body for all energy sources in Spain is the National EnergyCommission (Comisión Nacional de Energía—CNE). CNE is attached to the Ministryof Economy. It acts to set budgets, to ensure that licences are complied with andto settle any disputes arising from regulation. CNE is responsible for oversightof the legislatively mandated payments made to renewable energy sources.2.1. Spanish renewable energy policySpanish policy at the national level has been founded on the twin pillars of aREFIT-style subsidy scheme and of generous capital subsidies. However, regionalpolicies have also played an important role in both making wind energy projectseconomic and in encouraging the growth of new turbine manufacturers.One important aspect of Spanish law, which already favoured renewables in themid 1990s, was the existence of an obligation introduced in 1987 via RoyalDecree, on distribution companies to purchase all electricity from independentpower producers at a fixed rate. The intended effect of this being to minimizeany problems that Spanish wind turbine owners might face from utilities hostileto the use of renewables.Spanish wind energy development, and renewable energy development generally,is under the purview of a national renewable energy plan, which forms oneaspect of the Energy Savings and Efficiency Plan (PAEE).A wide-ranging national policy on renewables effectively began in 1994 with RoyalDecree 2366/1994. This formed the legal basis for the provision of feed-in tariffsfor electricity from renewable sources with a capacity under 100MW. The decreeinstituted a tariff at a rate of 80-90 per cent of the average final consumer pricepaid for electricity, with the specific rate calculated on an annual basis. Until thelate 1990s this was typically calculated to equal 88.5 per cent. In 1994, applicationof this rate amounted to an increase in the tariff available to wind from the10 peseta/kWh (€0.063/kWh) rate typically paid to IPPs, up to 11.57 pta/kWh(€0.073/kWh). The tariff was guaranteed to be paid for a five-year period in orderto provide increased stability to the market and to thus help encourage investment.A 1997 adjustment altered the payment scheme, effectively offering developersa choice of two payment schemes. They could opt to receive either a fixed price,in 1997 this being equal to €0.066/kWh, or a variable price based on the averageprice paid by consumers for all electricity consumed domestically in Spain,plus an environmental bonus. In 1997 this variable price worked out to€0.034/kWh, with an environmental bonus of €0.032/kWh, making the two practicallythe same, though this was not a matter of deliberate policy (WindDirections 1999). This figure was also intended to include a consideration for