Spain’s Ecology Ministry to tighten regulation on renewable energy market

OFFICIALS with Spain’s Ecology Ministry have drawn up plans to tighten regulation on the renewable energy market amidst fears excessive demand could fuel a speculative bubble.

Figures from Red Electrica de España (REE), which is in charge of managing and granting renewable energy access permits, shows current applications amount to more than 144,400 megawatts of power.

Ministry forecasts under its Energy and Climate plan predicted the amount would be 67,500 megawatts.

Concerns over a potential bubble previously led the Ministry to increase the guarantee fee for companies wanting to request an electrical installation permit from €10 to €40 per kilowatt. It was hoped this would stave off those who planned to buy the permits to sell on at a profit.

REE figures show power generated under the permit system totalled 28,400 megawatts, with permission granted for a further 45,900 and requests for 70,500.

Fears about speculation are new to the energy market. Previous permit rules coal and nuclear power plants and other installations contained no measures preventing speculation because it was thought no company would sell such assets on at a profit.

But the arrival of renewable energy sources such as solar panels and wind turbines has reduced investment costs, lowering market barriers to entry and opening it to speculation.

Officials fear that if that happens permits could become sought after solely for investment reasons, distorting the market and creating the conditions for a later crash.

Spain’s National Commission of Markets and Competition (CNMC) watchdog would have to approve any regulation changes put forward to make sure do not harm competition.

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Written by

Joe Gerrard

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