Greentech is present in Spain with both solar and wind energy, with a total gross installed capacity of 42 MW, 30 MW in wind and 12 MW in solar energy.

In Spain, the financial incentives for energy production from wind energy and PV plants (so-called special regime) has been  regulated by Royal Decree 661 of 25 May 2007. According to this decree, in order to sell the electricity they generate producers may choose between:

selling the electricity to the system through the transport or distribution grid, receiving a regulated feed-in-tariff in euro per kilowatt/hour;

> selling the electricity on the electricity production market. In this case the sale price of the electricity is the price obtained in the organized market or the price freely negotiated by the proprietor or the representative of the facility, supplemented where appropriate by a premium, in euro per kilowatt/hour (this option (b) is not available for PV plants).

The regulated tariff

The option for Wind: a single fixed amount for all the scheduled periods, 8.12698 euro /Kwh (2012) linked to the consumer price index for the first 20 years and 6.12 euro/Kwh from then onwards.

The option for Solar: a single fixed amount for all the scheduled periods for installations with a capacity of 100 Kw or less, 0.4887 euro/Kwh (2012) linked to the consumer price index for the first 30 years; for installations of over 100 Kw 0.4633 euro/Kwh (2012) indexed to the CPI for the first 30 years.

Royal Decree 661 of 25 May 2007 established a quota of installed power capacity. Once this quota was exceeded no incentivized economic regime would apply to these technologies unless a new regime was passed. This quota was exceeded for PV plants in September 2008 and for wind energy and solar thermal plants in November 2009.

A new financial system was adopted for PV plants under Royal Decree 1578 of 26 November 2008, but the Government was expected to approve new financial incentives for wind and solar thermal energy.

Between 2009 and 2012 some new legal provisions were passed to correct the tariff deficit, limiting the number of operating hours entitled to financial incentives as well as, in the case of PV plants, the number of years for the payment of the feed-in tariff.

Notwithstanding the above, the most important tariff deficit measure was adopted in January 2012, when instead of the expected law introducing a new financial regime applicable for wind farms and solar thermal energy, the Government passed Royal Decree Law 1/2012, which indefinitely suspended all financial incentives for new electricity generation facilities using cogeneration, waste and renewable energy sources as wind or solar energy.

On 28 December 2012 Parliament adopted the Law on tax measures for energy sustainability, which introduced a new 7% tax on the value of electricity production.

The impact of this tax is taken into account in the Company’s budget and business plan.

On February 2013 Royal Decree Law 2/2013 containing urgent measures in the electricity and financial sectors was enacted. This legislation modifies Royal Decree 661/ 2007, introducing new provisions:

> the remuneration of regulated activities (such as transport, distribution and renewable energy) must be linked to the consumer price index, excluding unprocessed food and energy products, which entails a reduction in the payments to the owners of electricity plants;

> several premiums and tariffs were either reduced or suppressed. The former became 0 euro/ kWh, while some of the higher tariffs were reduced;

> the second remuneration option, consisting of the combined system of pool price plus a premium, was removed. As a consequence, only the fixed FiT system remains, considering that if renewable operators choose the combined system, they will receive only the pool price. When the remuneration option is chosen, it will no longer be possible to change from one system to another in order to prevent producers from adopting the mechanism whereby they sold electricity to the market when the market price was higher than the FiT and went back to the FiT when the market price went down. According to the Government, this fluctuation contributed to an increase in energy prices.

On 12 July 2013, the Council of Ministers approved the Energy Reform, whose purpose is to balance the Spanish electricity system for good and avoid future imbalances in the system.

The Reform includes a Royal Decree Law with urgent measures to guarantee the financial stability of the electricity sector and an electricity sector Bill containing proposals to spread the efforts to balance the system among companies, consumers and the State.

The Reform introduces a new payment system for renewable energy, cogeneration and residues facilities. These will receive a standard fee for each of their technology investments that guarantees a “reasonable return” based on 10-year benchmark government bonds plus three hundred basic points, which represents a 7.5% profit margin. In particular, under the new law, RES producers will not receive a regulated price for the electricity but rather a specific compensation based mainly on the initial investment, that is calculated on a plant-by-plant basis by the Authority, taking into account the following parameters:
a) Standard income from the sale of generated power valued at production market prices;
b) Standard operating costs;
c) Standard value of the initial investment.

The Company has started an arbitration procedure under the Energy Charter Treaty against the Kingdom of Spain in order to claim damages generated by the changes in the renewable energy framework.