Power play: Power subsidies around the world
On February 3, the government laid out the details of its proposal to cut subsidies for renewable-energy producers, a move that the producers say could cause defaults. Successive Spanish governments have struggled to give financial incentives to clean energy without passing on all of the costs to consumers. That built up a debt temporarily borne by utilities, though under government guarantee, potentially eroding the credit strength of both. Prime Minister Mariano Rajoy’s administration has killed subsidies for new plants and scaled back those for existing facilities, and this latest move will put them on a traditional rate pegged to their cost of investment. The new formula, described in more than 1,500 pages, calculates a level of “reasonable profitability”.
The government has decided to start Multi Year Tariff (MYT) in the power distribution companies. The subsidies which are now being provided across the board will be rationalised and optimised by targeting them to the deserving segment of consumers.
Germany is struggling with rising energy costs as it phases out nuclear power and tries to shift to more renewable energy. In a bid to stem these rising costs in the coming years, energy minister Sigmar Gabriel has proposed cutting the average subsidy for wind, solar and other renewable power sources. On January 22, Chancellor Angela Merkel urged her cabinet to join her in backing Gabriel’s plan to reduce financial support for renewable energy. Gabriel’s plan includes reducing the average subsidy for wind, solar and other renewable power sources to an average of 0.12 per kilowatt-hour in 2015 from 0.17 at present. However, the plan has been criticised by members of the governing parties and business lobby groups.
Source: The Indian Express