Spanish legal overview over renewable energies: overriding investors protection legislation

Approximately 8 years after the "brick crisis" arose       -crisis del ladrillo-, Spain was not able to provide investors with alternative, highly-returning and growing investment opportunities. In a country which mainly depends on the tourist sector, despite ranking third in 2014 just after France and USA in volume of visits, the Spanish struggle to avoid recession caused by the 2008 crisis mainly goes through finding diversification and finding appealing projects to convince investors to come back and keep putting their greens on.

In this context, Spain had the opportunity to look far from bricks and focus on the renewable energy sector, for a number of reasons: firstly, to stop depending on importation of such sources, geopolitically and economically talking; and secondly, to appeal investors by developing a genuine newly regulated market with top prices and without huge competence.

Another disappointment

Spain's first obvious objective was to provide investors with a coherent and protective yet simple and appealing legal framework. Needless to say, that is hardly impossible to achieve in Spain.

Spanish three level administrative political configuration makes it hard for investors to understand to which public bodies they must connect to; yet much harder it is to fulfil with national legislation when the location for the plant is in a autonomous community with a record of numerous confrontative legislation issues with the national law in connection to the  sector of regulation, in this case, renewable energy.

However, investors turned a blind eye when hearing what Spain would provide them with: almost limitless subsidies to start their renewable energy plants, with long returning period of the costs, and with a protected energy cost-production tariff.

Desipite such, the inevitable k.o came after Spanish constitutional court decided to support the national government's knock out to such subsidies on the grounds of economic issues in relation to the recession. If such news left in agonize the sector, the killing strike came after the court ratified to retroactively replace the existing feed-in support for plants in operation with payments, whose form and level were still unclear. 

This means that the Spanish system is currently suspended and no new plants are allowed to enter the scheme. 

This disaster did not only cause international investors to start Arbitration proceedings against Spain claiming their compensation, but further caused the European Comission to formally express in this document the huge mistakes Spain did on the process, stating the fact that this situation could have been easily avoided by following the Comission's guideline published there and finishing by stating a number of sanctions to be expected for Spain.

Probably the worse of all these, and that the Commission points out: "Renewable Energy Sources producers have no certainty regarding remuneration through the support scheme for existing RES power plants", leaving little investors with nothing but a black future with no possibility to claim against Spain since its superior court has ratified the retroactivity of the reforms. 

How can Spain be seen as a country where to invest if legal principles such as international investors protection, rule of law, and constitutional warranties are overridden from one day to another?