Danish pension funds take on Spain over solar tariffs
DENMARK - AP Pension, PensionDanmark and PBU, three Danish pension providers with assets totaling €30bn, have written to the Spanish government and the EU Climate Action Commissioner voicing their concerns about Spain changing the tariffs for its solar power industry retroactively.
The three providers, with some 700,000 members, have been investing in the Spanish solar power sector for the past two years as part of their socially responsible investments.
Through its consortium, Green Power Partners, the funds have committed to invest €100m in the renewable energy projects, including €25m in Spanish solar energy plants.
In their letter to Elena Salgado, Minister of Economy and Finance, and Miguel Sebastian, Minister of Industry, Tourism and Trade, the trio expressed their concerns about reports that the Spanish government may consider changing the structure and/or the level of feed-in tariffs that have been committed to the solar plants commissioned in the past three years.
Peter Olsson, chairman of Green Power Partners and head of property at AP Pension, said the move, if true, could spell the end of the renewal energy sector and cause huge damage for years to come.
"The sector needs government guarantees to be able to compete with the fossil fuel sector," he said.
"Nobody will have confidence in the sector if fixed, state-backed prices are changed retroactively."
The letter to the Spanish ministers argues that any modification of the tariff structure that results in a material decrease in solar plant revenues will expose equity investors to "significant financial losses".
It also warns that any changes to the tariffs will undermine the credibility of the Spanish public sector because the renewable energy projects were developed and financed on the basis that tariffs would be assured over a 25-year period.
They said any retroactive changes to the tariffs would be viewed as a failure by the Spanish government to abide by its commitments.
Apart from writing to the Spanish ministers, Olsson has contacted Connie Hedegaard, the EU's first Climate Action Commissioner.
He said he was also planning to contact the European Commissioner for Energy, Günther Oettinger.
"We want the European Commission to address the issue, as it is a serious problem, not just for our current investments, but for the future of the sector," Olsson said.
"The uncertainty created will affect the industry across Europe, which could be fatal."
The Spanish ministries were unavailable for comment.