Feed-in tariffs for electricity from renewable energy sources (Special regime)

Royal Decree 661/2007, which was published on 26 May 2007, regulates the production of electricity under a special regime applicable to electricity produced from renewable energy sources. This royal decree supersedes Royal Decree 436/2004 of March 2004, establishing new tariffs and premiums for each kind of facility covered and incorporating renewable energy, waste to energy, hybrid systems and cogeneration plants into the special regime.

The cost of the regime is borne by the grid operator, who can pass on costs to consumers.

The grid operators costs are balanced monthly, and where there is a deficit this is covered by the National Energy Committee (CNE).

The new scheme generally applies to all technologies, with technology-specific and capacity-specific limits, as well as a combined feed-in tariff and feed-in premium scheme. Facilities with high system efficiency, or that use reactive energy, receive a bonus. Renewable energy facilities are covered by the special regime only if their installed capacity does not exceed 100 MW (50 MW for hydro facilities). Up to 50MW, operators can choose between receiving a feed-in tariff price, or a feed-in premium paid on top of the market electricity price. The feed-in tariffs are paid during the entire time of a systems operation, though these are reduced after a specified number of years. This period is 25 years PV, ocean and hydro systems, 20 years for wind and geothermal, and 15 years for biomass systems. Between 50 and 100MW, operators receive a bonus amount for the electricity produced. Solar PV systems are exempt from this arrangement; they receive guaranteed feed-in tariffs which are adjusted every quarter for new systems.

In September 2008, new tariffs and a new cap were established for solar PV. Systems registered prior to 29 September 2008 are eligible for a feed-in tariff of between approximately EUR cents 23/kWh and EUR cents 44/kWh (depending on system size). The installation cap of 371MW established by the law has been adjusted upwards to 500MW as of 2009, while the feed-in tariff has been reduced to EUR cents 32/kWh for ground systems and EUR cents 34/kWh for rooftop systems. A registry of systems eligible to receive the new tariffs has been established as of January 2009.

Guarantees for processing new applications: The decree provides that those requesting new production facilities in the special regime must present a guarantee for an amount equivalent to EUR 500/kW for the photovoltaic facilities or EUR 20/kW for all other facilities. Facilities holding a certificate for the definitive start-up of service before 1 January 2008 that opt to transfer, before 1 January 2009, electricity to the system in return for a regulated tariff will continue to be covered by Royal Decree 436/2004 for the lifetime of that facility.

Facilities holding a certificate for the definitive start up of service before 1 January 2008 that opt to sell, before 1 January 2009, energy on the market will also continue to be covered by Royal Decree 436/2004 - until 31 December 2012. Facilities using solar energy as raw material, however, are exempt from these exceptions.

Finally, the decree seeks to contribute to Spains efforts to achieve its 2010 national target for the promotion of electricity from renewable energy under EC Directive 2001/77/CE.

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