Spain to exempt most wind farms from clawback tax

The Spanish government is to partially withdraw new taxation rules on energy facilities that looked certain to seriously damage the profitability of wind farms.

A ‘windfall tax’ on wind farm revenues that entered force on 15 September mandated all zero-carbon electricity production facilities in mainland Spain to “give back” any excess remuneration to the electricity system. 

The temporary measure, which was introduced to mitigate the impact of rising gas prices on Spanish consumers, threatened revenues at existing wind farms and investment in future projects, the industry said at the time.

Big utility players shied away from Spain’s latest renewables power auction last month. Industry body WindEurope linked companies’ decisions to not compete with the government plans to claw back revenue from wind farms. 

Welcoming the government’s decision to retract the bulk of the measures, WindEurope stated that it was “good news” that, under the revised plan, “any installation that can prove it has any type of PPA or financial hedging not indexed to the spot price will be exempted from the clawback”. 

The exemption will also apply to new power purchase agreements (PPAs), providing more security to investors — including on merchant projects — than the previous measures, the association added.

A WindEurope spokesman told Windpower Monthly the exemption should apply to most Spanish wind farms, with only a “limited minority” still affected by the charges.

WindEurope chief policy officer Pierre Tardieu said: “Retracting the clawback measures is a step in the right direction. Without a good regulatory framework that gives investors certainty, it will not be possible for Spain to reach its climate targets cost effectively.”

The Spanish wind energy association, AEE, was contacted for comment.