According to a recent article in the Spanish daily, El Pais, a cable released by Wikileaks on Christmas Eve shows that the Ministry of Industry may have tailor made a tender for California solar company, Solar Reserve, to permit the construction of a 50-MW solar thermal electric (STE) plant in Ciudad Real. The Ministry has declined to comment on the Wikileaks cables.
The Ministry of Industry closed the bidding period to construct a 50-MW STE plant for R&D purposes on 23 December 2010.The period for submission of bids only lasted 20 days, which is quite unusual given the complexity of such projects. A bid was presented by California-based, Solar Reserve, one firm that had already bid unsuccessfully during the round of awards carried out by the Ministry of Industry in 2009. In principle, the 2009 round closed the doors to the construction of any further plants until 2013.
However, according to information published by El Pais, the Ministry of Industry’s decision to carry out the tender process in December responded, according to sources familiar with the case, to a request made by the US Ambassador in Madrid, Alan Solomont, to the Minister Miguel Sebastián in January to seek "an alternative legal route" to allow Solar Reserve to build its solar plant. The request appears in one of the cables obtained by Wikileaks.
“Favourable consideration” for US companies
The cable, sent by the embassy to Washington, describes Ambassador Solomont’s conversations with Miguel Sebastián, during which he emphasised the importance of strengthening the bilateral economic relationship between Spain and the US to create jobs. Solomont noted that Spanish companies were the largest recipients in the US of stimulus funding for renewable energy projects, and said he wanted favourable consideration of US companies' proposed investments in Spain.
In the cable, Solomont mentioned two planned solar thermal electric investments by US companies, saying that both were “important symbolically as well as for the direct amounts of investment and jobs they would bring”. The first, by Florida Power and Light subsidiary NextEra (which has been given the green light to build two solar plants in Extremadura), was described as being “in good shape and would be the largest new US investment in Spain in several years”. “It would be an example of the two governments' shared confidence in renewable energy,” Solomont said.
Bursting the bubble
The second planned investment by Solar Reserve, however, caused the Ambassador greater concern. Minister Sebastián responded by explaining how a bubble was forming in Spain's solar thermal electric sector, with far more companies applying to build projects and receive the generous guaranteed feed-in tariffs than the Government had expected, and that the result was going to be very expensive to consumers for many years. Sebastián noted that his government had changed its registration process to burst these bubbles, and that many Spanish companies were very upset with it for doing so.
The leaked cable went on to say that Spain’s Secretary of State for Energy, Pedro Marin, had explained how Solar Reserve had been late in submitting its project, which was also over the 50-MW limit. Marin said that in light of Solar Reserve’s delay, “it would be difficult for the Spanish government to allow Solar Reserve to ‘jump the queue’ ahead of all the other companies that had applied”, and that he was unsure what the guaranteed feed-in tariff would be after 2013, although he did point out that the tariff would certainly be lower.
The cable goes on to reveal that the Ambassador acknowledged Sebastian's and Marin's comments and noted that Solar Reserve was willing to accept a tariff that was significantly lower than at present, but urged the Minister and the Secretary to look at the company's arguments again and “see if anything could be done”. He said the US government’s interest was “partly in business terms and partly because of the symbolic importance” of the project.
It appears the Spanish government took note of Solomont’s petition, passing a royal decree on renewable energy on 23 November 2010, which included an additional provision for innovative solar thermal electric facilities, a category under which it would be possible to include Solar Reserve’s proposed plant under the premise that it is for R&D.
The Ministry of Industry declined to comment on the Wikileaks cables, saying that the tender process has still not been concluded and that it cannot reveal how many companies have submitted bids. The Ministry has a statutory period of 45 days to award the bid, so watch this space.
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