Spain’s Supreme Court backs renewable energy cuts

Decision finds that €1.7 billion drop in subsidies was legal, but government still faces dozens of claims in arbitration agencies

A solar power plant in Spain.
A solar power plant in Spain.Luis Azanza

The Spanish Supreme Court has dealt a new blow to renewable energy producers.

In a ruling, the court backed the 2014 government decree that resulted in cuts of nearly €1.7 billion in subsidies for the sector.

The decision is a setback for the three producers who fought the legal battle against the Spanish government

The court finds that the decree, passed by Mariano Rajoy of the Popular Party (PP), does not violate the Spanish Constitution or EU legislation, as the plaintiffs claimed.

The decision, which confirms an earlier ruling by the Constitutional Court, is a setback for the three producers who fought the legal battle against the Spanish government: Ingeniería Civil, Alternativa y Medioambiental (Incam), Renovables Samca and Llerena Solar, Temcli y Powersol 2007.

But hundreds more similar appeals have reached the Supreme Court, which is expected to rule along the same lines in the coming months.

The one piece of good news for producers is that the new premiums are not retroactive, so that past subsidies do not have to be returned.

Waiting for ICSID

Despite the favorable rulings for the Spanish government, the legal battle over the cuts to renewable subsidies is not over.

Dozens of companies and investment funds have turned to the International Centre for Settlement of Investment Disputes (ICSID), a World Bank-sponsored arbitration agency, with claims against Spain. Those decisions are still pending.

But in January, another claim at the Arbitration Court of the Stockholm Chamber of Commerce ended in Spain’s favor.

English version by Susana Urra.

Necessary cuts?


The legislative changes to conditions for investment in renewable energies were rushed through parliament by royal decree, as Spain sought to contain its ballooning deficit in the middle of the economic crisis.

Calculations indicate that Spain was paying excessive premiums and subsidies to thermosolar and photovoltaic producers, and that such premiums, in excess of market rates, were one of the causes of the unrelenting rise in the tariff deficit – the difference between the cost of producing electricity and what Spanish consumers are actually charged for it.

Spain has the fourth-highest electricity costs in Europe – around €80 per person a month.

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