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Renewables Industry Facing Bankruptcy As Spain Cuts Subsidies

Miles Johnson, Financial Times

Spain will announce what the government expects to be its “definitive” energy reform before the end of July in a move likely to slash profitability across the country’s renewable energy sector.

Having been a world leader in backing alternative power sources such as solar and wind energy, Spain has been forced to reconsider the generous incentives it offers its heavily indebted renewables industry.

After several delays to its attempt to cut subsidies to the sector, the Spanish government is now planning to impose a cap on profitability across all renewable technologies, said officials familiar with the draft reform.

The cap would be set at a fixed level above Spain’s government borrowing costs and represent an official judgment of acceptable profitability over the entire term of an investment.

However, this is unlikely to provide a return large enough to avoid the most indebted solar and wind energy projects falling into the hands of their lending banks.

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