The Spanish Government yesterday presented a new measure that, if approved, would impact the revenue of certain wind farms, which according to the Government, unduly benefit from rising carbon prices.
It would apply specifically to wind farms that have been connected to the grid before 2005 and that no longer benefit from any support scheme. These wind farms get their revenue today exclusively from the wholesale power market which reflects carbon costs under the “polluter pays principle”.
Over the last months Spain’s wholesale market prices for electricity have been on the rise, partly due to rising carbon prices. But wholesale power price dynamics are very complex and cannot be attributed exclusively to rising carbon prices.
WindEurope is extremely concerned about these plans. We are still studying the details of the proposal. But on the face of it, the proposed measure should not apply to wind energy.
CO2 pricing is meant to support the expansion of wind and solar. Imposing such a measure on wind energy runs counter to logic. And it runs counter to a core principle of EU climate and energy policy. It contradicts how CO2 emissions trading is meant to work and how it’s meant to interact with energy markets.
To impose this measure would also send a negative signal to those planning to invest in wind energy in Spain and undermine their confidence in normal market rules. Moving goalposts always risks undermining investment. But wind and solar are the technologies we need to be investing in, to deliver the energy transition. Indeed, the IEA reminded us only yesterday that we’re not investing enough in them.
So a measure such as this which risks undermining investment in wind is plain wrong.