Spain To Tax Renewable Energy

Spain to tax renewable energy which is likely to wipe out 75% of the country’s uneconomic wind and solar farms

Spain is another Euro zone economy in dire financial trouble, where the Government is pursuing austerity measures to try and regain control of the country’s spending.

The problems facing Spain are due in part to the Greening of the Spanish economy by the previous Socialist government, this has proved to the traditional socialist economic blunder with every Green job wiping out 2.2 jobs in conventional industries.

As the economic reality of the costs of Green subsidy hit home to the new Spanish Government, they decided, in January this year, to cut all Green subsidies for new renewables projects, a move that has effectively killed Green energy in Spain.

As usual the uneconomic wind and solar industries were being kept alive by Green subsidy, costing €7 billion a year and increasing the tariff deficit by €3 billion a year, in other words totally unaffordable.

Mariano Rajoy’s pledge to tax utilities and power consumers signals Spain is planning to raise cash from renewable energy for the first time, a blow to an industry already struggling with subsidy cuts. It could wipe out 75 percent of equity in Spain’s renewable industry.

The prime minister told Parliament yesterday he’d impose a levy to spread the expense of closing a gap between costs and revenue in the country’s electricity business, which has racked up debts of 25 billion euros ($31 billion). Details may be announced as early as tomorrow after the weekly Cabinet meeting.

Extending the treasury’s net to cover wind and solar power is part of Rajoy’s 65 billion-euro austerity package aimed at curbing the deficit. Fund managers from HSBC Holdings Plc (HSBA) to Deutsche Bank AG (DBK) and developers are lobbying the government to restrain the scale of the taxes, saying higher fees may tip companies into bankruptcy.

“The new taxes that are being considered are astronomical,” Miguel Salis, chief executive officer of Eolia Renovables SA, a Madrid-based wind and solar farm developer. “They represent 9 percent to 20 percent of gross revenue for these plants, which would create several problems, including many solar plant defaults.”

How anyone can believe that wind and solar are real technologies is defies belief, if the Green subsidies are cut the companies pushing this flawed technology go bankrupt, if the companies are taxed on their profits they go bankrupt.

Without exception wind and solar fail the basic test of any business, to find a profitable market niche, create employment and pay taxes, and all funded with what was once known as venture capitalism, but since the arrival of the Green Dream, venture capitalism has been replaced with crony capitalism and tax payer funded subsidy.

“Spain has an accumulated energy debt and a current energy-tariff deficit”, Peter Sweatman, head of Madrid-based consultancy Climate Strategy S.L., said in an interview. “The solutions to this unsustainable problem are a mix of increased energy prices, lower generation/connection costs and potentially fiscal measures.”

The greed for feedin tariffs and Green subsidies has cost the far stronger German economy €300 billion, which even the Germans cannot realistically afford.

Italy has already started taxing renewable energy generators and as the ever deepening Euro zone crisis grinds inexorably onwards, Spain will not be the last country looking at the costs of the renewable energy boondoggle.