Spanish cogen chiefs write to European Commission

The Spanish cogeneration industry has seen fit to write to the European Commission over recent taxes and legislation introduced by the Spanish government.

The letter addressed to Director General of the Energy DG, Philip Lowe, COGEN Spain highlights the worsening business environment for cogeneration.

Philip Lowe
COGEN Spain asks the European Commission to properly assess the current and proposed actions from the Spanish government and to take necessary steps to ensure that domestic legislations are in line with the new Energy Efficiency Directive (EED) which passed into European Law a month ago.

In an effort to tackle the joint challenges of overcapacity in the electricity sector and finding a new burden sharing mechanism for the electricity system cost, the Spanish government has proposed new measures in 2012.

But the net result of the changes would be a budget contribution from cogeneration plants almost on parity with the coal-fired power plants or the whole nuclear sector. When put in €/MWh, the changes would result in a tax burden (including taxes on the energy product and the electricity generated) on cogeneration 45% higher than that on pure electricity generators using coal and more than twice the level of that on wind producers.

In addition, a more recent proposal on natural gas taxation - still under discussion at the Senate level - would further put industrial CHPs producing useful heat at disadvantage over conventional boiler installations, in total opposition to the spirit of European legislation.

The government had earlier this year suggested creating new legislation for cogeneration but this has not materialised and the resulting uncertainty has halted investment.

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