Foreign Investors May Sue Spain Over Renewable Energy Cuts: Report
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Foreign investors in renewable energy projects in Spain are considering legal action against the government for cutting subsidies on alternative energy technologies, reported Reuters on Thursday, after claiming that the government’s new rules broke the terms of their investment contracts; and may result in virtually no profit for renewable energy plants.
Foreign investors in renewable energy projects in Spain are considering legal action against the government for cutting subsidies on alternative energy technologies, reported Reuters on Thursday, after claiming that the government’s new rules broke the terms of their investment contracts; and may result in virtually no profit for renewable energy plants.
The news came after both Spain and Germany announced new laws to curb rising household electricity costs – at the expense of subsidies to the renewable-energy industry, who had received great support during the early 2000s.
In total, the law could cut the costs of Spain’s electrical system between 600-800 million euros a year, though renewable-energy companies claim that the government was backing away from promises to ensure a reasonable return on their investments.
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“International investment funds are consulting with legal advisers on how to proceed with action. There will be various lawsuits,” told Luis Crespo, secretary general of Spain’s solar thermal association to Reuters.
[quote]”Spain’s government is trying to smash the renewable-energy sector through legislative modifications,” added José Miguel Villarig, chairman of the country´s Association of Renewable-Energy Producers, to the Wall Street Journal.[/quote]According to Reuters’ estimates, international funds poured in more than 13 billion euros into renewable energy assets in Spain for nearly a decade, thanks to the Spanish government’s generous subsidies, which helped the country become one of the biggest markets for investments in green energy.
The measures however built up a 28 billion euro tariff deficit in the electricity system – with politicians no longer willing to let consumers bear the cost, amid a recession and continued protests against the government.
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When asked to comment on the potential lawsuits, Spain’s Industry Minister Jose Manuel Soria told Reuters that the government had the general interest and the legality in mind before legislating.
Nevertheless, investors, including those from the United States, Japan and the United Arab Emirates, are likely to pursue action through the Brussels-based Energy Charter, an internationally ratified treaty that binds its members to rules on energy and arbitration.
Some of the funds planning legal action are also among the 11 investors who sent a letter to Prime Minister Mariano Rajoy last July to complain of another energy reform with a retroactive impact on investments, claimed Reuters. Spanish renewable energy companies however will not join the appeal, due to a past decree by the government.
