Mariano Rajoy’s pledge to tax utilities and power consumers signals Spain is planning to raise cash from renewable energy for the first time, a blow to an industry already struggling with subsidy cuts. It could wipe out 75 percent of equity in Spain’s renewable industry.
The prime minister told Parliament yesterday he’d impose a levy to spread the expense of closing a gap between costs and revenue in the country’s electricity business, which has racked up debts of 25 billion euros ($31 billion). Details may be announced as early as tomorrow after the weekly Cabinet meeting.
Extending the treasury’s net to cover wind and solar power is part of Rajoy’s 65 billion-euro austerity package aimed at curbing the deficit. Fund managers from HSBC Holdings Plc (HSBA) to Deutsche Bank AG (DBK) and developers are lobbying the government to restrain the scale of the taxes, saying higher fees may tip companies into bankruptcy.
“The new taxes that are being considered are astronomical,” Miguel Salis, chief executive officer of Eolia Renovables SA, a Madrid-based wind and solar farm developer. “They represent 9 percent to 20 percent of gross revenue for these plants, which would create several problems, including many solar plant defaults.”