Renewable Investors Breathe Easy After Spanish Elections

Clean energy advocates celebrated after a pro-renewables party
got the highest share of the vote in Spanish elections over the
weekend.

The center-left Spanish Socialist Workers Party (Partido
Socialista Obrero Español, or PSOE) picked up almost 29 percent of
votes and 123 seats in Spain’s 350-seat congress, trouncing its
traditional opposition, the right-wing People’s Party (PP), which
secured just 66 seats.

While the result leaves the PSOE short of the 176 seats it would
need to govern with a majority, it nevertheless gives the
socialists a clear mandate to steer national policy for the next
four years.

That is “very positive for the energy transition,” said
Daniel Pérez Rodríguez, chief legal officer at the independent
green energy retailer Holaluz.

Spain’s renewables market, at one point among the largest in
the world, has been seeing a resurgence after years of neglect at
the hands of the PP. The party axed once-lavish subsidies in 2013
and introduced a system with three-yearly reviews that scared off
investors.

The PSOE seized power from the PP last June after a vote of no
confidence triggered by a corruption scandal. But PSOE leader Pedro
Sanchez, governing with only 84 representatives in congress, was
forced to call elections when lawmakers refused to back his budget
proposals.

The PSOE’s roadmap includes a major commitment to renewable
energy.

Last year Sanchez merged environmental and energy affairs into a
single government department for ecological transition whose head,
Teresa Ribera, has led moves to end
longstanding regulatory uncertainty
surrounding renewable
investments.

In its
campaign manifesto
, the PSOE has pledged to achieve a 2030
target of 35 percent renewables in the final energy mix and 74
percent in electricity generation. The manifesto also calls for 100
percent of electricity to come from renewables by 2050.

Elsewhere, the document proposes electricity market reform and
promises a solution to the difficulties experienced by small
investors who lost out when renewable subsidies were axed in 2013,
paradoxically because of a poor regulatory framework put in place
by the PSOE.

Next steps clouded by political fracturing

Ribera, a former secretary of state for climate change and ex
director of the Institute of Sustainable Development and
International Relations, is seen as a safe pair of hands to steer
the pro-renewables initiatives.

There is uncertainty, however, over whether she will retain her
post if Sanchez has to let other parties into his administration.
The highly fractured nature of Spanish politics means there are
several options on the table.

A decade ago, Spain had the kind of two-party system still
prevalent in the U.S., with PSOE and PP occupying roughly the same
ideological space as the Democrats and the Republicans
respectively.

But these latest elections saw five national parties sharing
almost 86 percent of the vote.  A further 10 percent went to nine
parties looking to represent Spanish autonomous communities at
national level.

They included a strong showing for two parties committed to
splitting Catalonia from the rest of Spain, a topic that has become
a flashpoint in Spanish politics.

Against this backdrop, the simplest option for Sanchez would be
to gain a majority by joining forces with a rising center-right
party called Ciudadanos (‘Citizens’), which came third after
the PP with almost 16 percent of votes and 57 seats in
parliament.

Ciudadanos, led by stock market favorite Albert Rivera, came
close to forming an alliance government with PSOE in 2015.

It’s a combination that would go down well with foreign
investors, said Mortimer Menzel, partner at the renewable energy
financial advisory firm Augusta & Co, by providing a right-wing
balance to PSOE’s more left-wing inclinations.

Such a pairing looks unlikely at present, though. It would be
unpopular with PSOE followers, who chanted “not with Rivera” as
Sanchez
took the stage
to address them following his victory.

And it would be even more challenging for Rivera, who has been
vocal about fighting PSOE-led attempts to negotiate with regional
separatists and who now appears keen to assume the PP’s role of
principal opposition, with a chance of winning the next
election.

Good news for renewables

Another option for the PSOE is to build a government with
Unidas Podemos, a far-left party that is keen to form an
alliance.

This, however, would still fall short of a full majority and
would force Sanchez to add at least one other party to the mix from
among the main separatist groups, an unpalatable prospect given the
divisiveness of the Catalan independence issue.

A wrinkle in Spanish electoral law might allow the PSOE and
Unidas Podemos to form a government on their own if the separatist
parties abstain from voting in a runoff that can be claimed by a
simple majority. That, too, is a high-risk strategy.

Finally, the PSOE may attempt to go it alone in a minority,
forging tactical alliances where needed. The party’s Vice
President,
Carmen Calvo, said
this would be the PSOE’s preferred route
for now.

Whatever the outcome of negotiations, it is likely to spell good
news for renewables in Spain. Although Spanish consumers are still
seeing high electricity costs, the big concern in these elections
was the rise of a far-right party, Vox.

The party ultimately secured a presence in parliament but polled
below expectations, gaining 24 seats with 10 percent of the
vote.

With Vox and Catalan independence as the main talking points,
renewables barely got a look-in on the campaign trail, and the main
parties involved in policymaking are expected to wave through
future legislation on the energy transition.

The Spanish Association of Renewable Energy Companies, APPA,
said it hoped the new government would reform the market to favor a
transition towards renewables, while improving regulatory stability
to allow greater investment and job creation.

And Augusta & Co.’s Menzel told GTM: “For renewable
energy, having the socialists leading a government is the best
option. The PSOE approach to renewables has always been better than
the approach of the PP.”

Source: FS – Transport 2
Renewable Investors Breathe Easy After Spanish Elections



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