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You would think that a cut to future subsidies for solar power in Spain would have minimal impact on northern European wind developers. But renewables execs at a planning meeting for the Power and Renewables Summit 2011 looked almost traumatised by the events of last year.
When asked about the biggest hurdle for investment in capex-intensive projects such as offshore wind farms, all agreed that it was uncertainty in government subsidy regimes. “Look what happened in Spain,” they murmured.
However, what happened in Spain purely affected future contracts. What renewables execs really worry about is retrospective cuts: ones which will damage profits on projects that are already up and running. Was even the mere suggestion that cuts could be applied retrospectively in Spain enough for investors to fret? That’s what these bosses claimed.
When Germany announced its plan to phase out nuclear power stations last month, shares in the big four German power companies rose. The agreement made with the German government would see Eon, RWE, EnBW and Vattenfall pay a nuclear-fuel rods tax of €2.3bn until 2016 – but the market had been expecting worse.