Spain's earnings clawback plan 'would harm renewables investment motivation'

• A suggested law in Spain focused on clawing back revenues from emissions-free nuclear power plant would develop threats for renewables investors as well as favour fossil fuel-fired generation, according to trade teams that have advised the European Union (EU) to intervene.

The draft law "seriously threatens investment motivations" for decarbonised electricity generation and "lowers the commercial revenues of certain non-emitting business", AELĒC, Eurelectric, the European Federation of Energy Traders, the Global Infrastructure Investor Association and WindEurope wrote in a letter sent to the EU last week.

Spain's federal government has actually relaunched the legislative treatment on the draft law for a new regulation on the electrical energy market that will decrease the revenues of non-CO2 releasing generation facilities installed prior to 2003.

According word for word, the objective of the system is to contain, on a permanent basis, the effect of higher CO2 discharge allowance prices on Spanish consumers by clawing back "extreme revenues" that have allegedly been made by certain non-CO2-emitting facilities.

Signatories to the letter said the European Commission should get in talks with Spain's government and also reveal its problems over a draft law "that contrasts the EU structure, consisting of the different Commission Communications, that are targeted at incentivising ... decarbonisation, by guaranteeing lawful assurance as well as stability for investors".

The letter kept in mind that financial investments in solar, wind as well as storage space take place because firms think that they can make a fair return on them. Spain's recommended action "essentially harms that financial investment incentive and also produces extra threat for investors", the trade bodies claimed.

They added that the suggested law goes against the REPowerEU strategy, which claims that windfall profit actions ought to not influence the carbon cost signal from the EU Emissions Trading System.

The news follows Spain's government presented a device last year to limit windfall profits of some renewables plants.

According to the letter, the coexistence of the previous procedures with the new recommended law "would structurally damage the terribly needed non-emitting generation, whose costs are already elevating". The profession bodies claimed this "would have the impact of favouring fossil-based power generation".