Protecting small renewable energy investors

We still don't know the causes of the massive blackout on April 28th that left the entire Iberian Peninsula without power, but we do know that lack of investment and grid instability are two related weaknesses that need to be addressed. Renewable energy sources are not responsible for the blackout, but a lack of planning and foresight when integrating them into the electricity system may have a lot to do with it. This lack of foresight and planning is also being felt now in the situation of 8,500 small Catalan investors in solar energy—62,000 in Spain—who have been abandoned by the same administration that pushed them to make the investment and that now compensates, for the same reasons, large international funds but leaves them to the same end.

In 2010, due to the economic crisis, the Spanish government, led by the Socialists, cut remuneration for solar power plants. It did so in exchange for extending them for another five years. But in 2014, the government, then controlled by the People's Party (PP), changed the system for calculating these rates and, in practice, reduced them by between 30% and 50%. Many small investors had gone into debt to advance renewable energy projects at a time when the technology was neither as mature nor as affordable as it is today. They had been pioneers, but as a result of the regulatory changes, they began to find themselves in a difficult situation. Some sold off their facilities at a loss, others had to refinance their debt and pay more interest, which further reduced their income.

This situation didn't only affect small investors. The Moncloa (Spanish National Council) has decided to pay $32 million in compensation for these regulatory changes to the Blasket fund, which specializes in litigation and had an open arbitration process at the World Bank. Blasket had purchased the rights to that lawsuit from another large company, JGC Holdings. On the contrary, the Supreme Court finds that small investors have no right to any compensation. They have had to turn to the Spanish courts.

All of this, apart from a clear sense of injustice that is causing small investors to also demand compensation, has repercussions for society as a whole. If renewable energy had been an opportunity to decentralize the electricity generation sector, unlike what happened with the fossil fuel-based energy system, this opportunity is being lost. According to the National Association of Photovoltaic Energy Producers, while between 2007 and 2008 small installations provided 62% of installed electricity generation capacity, they now account for only 0.5% of new installations. Thus, it seems that the drive of small entrepreneurs and investors who could help accelerate the development of electricity production with renewable energies, essential to try to curb global warming and guarantee European energy sovereignty, is being lost.