Sweden’s iconic furniture chain Ikea has pulled the plug on one of its largest solar investments in Spain as budget-saving, retroactive subsidy cuts came into effect. The 10 megawatt (MW) solar plant in Cuenca has been handed back to the bank as its revenues proved insufficient to warrant Ikea keeping it in its project portfolio, according to PV Tech.
The €65-million plant was built in brighter days, when renewables were booming in Spain and incentives were generous. As economic times became harder, however, the government has deemed it necessary to pare back the feed-in tariff incentive schemes that made renewables so popular in the first place. Instead, they have been replaced with a mechanism that caps profit for any solar farm at 7.5% the original investment. Spanish solar PV trade group UNEF estimates that solar incomes will be cut by 25% on average, with larger projects being hit particularly hard.
UNEF’s director general Jose Donoso expressed concern for the impact that the cuts would have on confidence in Spain’s solar sector. “This is going to have a dramatic effect on the Spanish solar industry and Spanish solar investors. … Most projects will have a reduction in income of 25-50%. Most people will try to renegotiate with the banks but for larger projects this solution will not be possible, the cuts are too great. These people will go bankrupt,” he told PV Tech.
The situation might sound familiar to solar system owners in NSW and Western Australia. Both state governments have at different points made attempts to retroactively reduce feed-in tariff incentives, even though those who had signed up for them did so believing they would remain in place for their respective prescribed durations. But in both of these cases, the reduction attempts were ultimately unsuccessful. Whether the current federal government will end up weakening the Renewable Energy Target–currently the main support mechanism for solar power in Australia–however, is yet unclear.
Ikea has repeatedly shown itself off to be a renewable energy leader in the retail space, not only fitting out many of its stores throughout the globe with solar panels & other renewables, but even going so far as to set a 100% renewable energy target for itself–not to mention selling solar panels in its stores in the UK.
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