Oil Report

Spain wind power firms want clearer aid rules

* Industry doubts over subsidies after 2010

* 45,000 MW wind power said needed for EU 2020 targets

* Premiums seen falling if oil rebounds

MADRID, May 13 (Reuters) - New wind power subsidy rules in Spain make future planning in the industry difficult, its wind power firms said on Wednesday.

Spain’s wind power sector is the world’s third-biggest producer and says it is key to meeting EU renewable energy targets by 2020.

The current subsidy scheme is due to expire in 2012, but producers say a new law enacted last week did not specify whether new wind farms will receive aid after 2010, when total generation capacity is expected to reach government targets.

“The sector will have much to do in the next year to 18 months, but what they (government) must do is clear things up from then on,” Jose Miguel Villarig, spokesman for wind power at renewable energies’ group APPA, told a conference in Madrid.

Renewable energy has boomed in recent years in Spain as governments have sought to cut greenhouse gas emissions and the country’s hefty fuel import bill. Now only the United States and Germany produce more wind power than Spain.


But the government is faced with a soaring budget deficit and has already slashed aid to solar power, of which Spain became the world’s second-largest producer after exponential growth last year.

APPA and wind power group AEE estimate Spain will need to generate 43 percent of its electricity from renewable sources if it is to meet an EU target to derive 20 percent of all energy from renewables by 2020.

To do this, they say wind generating capacity will need to rise from a current 17,000 megawatts to 45,000 MW, of which 5,000 MW would be offshore. The government has fixed a target of 20,155 MW for installed wind power by 2010.

Under current rules, wind farms installed before Jan. 1, 2008, are entitled to a premium of 40 euros ($54.59) per megawatt-hour until the end of 2012, whereas those that went online afterwards may receive a maximum of 82 euros/MWh.

AEE calculates its members can sell 1,000 MW of power to the pool at an average discount of 2 euros/MWh to the pool, and that the total savings outweigh the premiums they receive.

AEE spokesman Sergio de Otto told the Genera conference that for much of 2008 many wind producers received no premiums because power prices -- driven by record oil -- overtook the 82-euro cap.

In comparison, the benchmark pool price in Spain was fixed at 36.11 euros/MWh on Wednesday <SP/BASE>.

“When we have high market prices again -- and we will, when the crisis is over -- premiums will fall hard,” he said.

Spain is home to the world's biggest generator of wind power, Iberdrola Renovables IBR.MC, and Gamesa GAM.MC, the second-largest manufacturer of wind turbines.

Wind power accounted for 17.6 percent of Spain’s generating capacity last year, and supplied 11.5 percent of its electricity needs. (Editing by James Jukwey)