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Regulator suspends further solar subsidies

Source: Bloomberg - Thu 23rd Jun 2011

Solar Industry regulators have suspended subsidies for a further 279 installations in Spain, bring the total number of installations punished for not abiding by the rules for earning above-market prices, to 1'561.

Spain's National Energy Commission announced the suspensions after inspecting over 7'000 of the 8,201 installations suspected of not meeting requirements, the regulator said in a statement released yesterday.

The owners of these installations had failed to prove they were able to produce power by the Sept. 30, 2008, deadline in order to earn the highest consumer- subsidized rate. That tariff is 47.5 euro cents a kilowatt-hour, roughly nine times today's price paid to operators of fossil fuel power plants.

Spain is trying to reduce subsidies given to many of the nation's renewable-energy plants as a means of lowering electricity costs for businesses and homes and help the economy emerge from the worst economic slump in over 50 years.

Following a change to the law last year, the energy regulator has now requested more proof from 9,041 solar plants that they had completed all construction permitted by the September 2008 deadline. It had been suggested that hundreds of entrepreneurs were illegally earning the higher subsidy rate, which was lowered after 2008.

Of the total number, 840 operators did not challenge the reduction of the tariff paid to 32.6 cents a kilowatt- hour in order to avoid losing their subsidy payment altogether.

The 1,561 installations to be penalized currently produce around 5.5% of the country's solar energy.

The suspensions handed out so far are "precautionary" until final judgments are made, the commission said.

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