End November, the Spanish cogeneration industry has written to the European Commission expressing their concerns regarding recent changes in tax and power generation legislation in Spain. The sector is particularly concerned about new announcements that could further have disproportionate negative impacts on highly efficient cogeneration embedded in economically active industry compared to pure electricity generators who are the original target of these changes. Industry in Spain is itself threatened by the economic downturn and the changes to electricity industry legislation are an additional blow at a time where economic recovery is crucial.

In its letter addressed to Director General of the Energy DG, Philip Lowe, COGEN Spain highlights the worsening business environment for cogenerators. In an effort to tackle the joint challenges of overcapacity in the electricity sector and finding a new burden sharing mechanism for the electricity system cost, the Spanish government has proposed new measures in 2012. But the net result of the changes would be a budget contribution from cogeneration plants almost on parity with the coal-fired power plants or the whole nuclear sector. When put in €/MWh, the changes would result in a tax burden (including taxes on the energy product and the electricity generated) on cogeneration 45% higher than that on pure electricity generators using coal and more than twice the level of that on wind producers. In addition, a more recent proposal on natural gas taxation - still under discussion at the Senate level - would further put industrial CHPs producing useful heat at disadvantage over conventional boiler installations, in total opposition to the spirit of European legislation.

The government had earlier this year suggested creating new legislation for cogeneration but this has not materialised and the resulting uncertainty has halted investment.

In its letter to the Spanish government, COGEN Spain asks the European Commission to properly assess the current and proposed actions from the Spanish government and to take necessary steps to ensure that domestic legislations are in line with the new Energy Efficiency Directive (EED) which passed into European Law a month ago.

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For more information please contact:

Dr Fiona Riddoch, Managing Director

Tel: +32 2 772 8290 Fax: + 32 2 772 5044

Email: fiona.riddoch@cogeneurope.eu

Stefan Craenen, Communications Manager

Tel: +32 2 772 8290 Fax: + 32 2 772 5044

Email: stefan.craenen@cogeneurope.eu

About cogeneration:

Cogeneration (also known as CHP or Combined Heat and Power) is the simultaneous production of heat and electricity. 11% of Europe’s electricity and associated heat requirements today are produced using this proven energy efficiency principle. The estimated growth potential for cogeneration is a further 110-120 GWe which will lead to an improved environment and greater economic competitiveness in Europe. Cogeneration units can be found in different sizes and applications: industry, households and tertiary sector and spans applications with capacities ranging from below 1kw to hundreds of Megawatts. It is a highly efficient energy solution that delivers energy savings and substantial reductions in CO2 emissions. When seriously supported, as in Denmark, CHP has the potential to increase the energy production and transformation system overall efficiency from a bare 33% (EU average) up to 65%. Realising the potential of cogeneration in Europe will contribute significantly to reaching the strategic climate and energy goals, such as security of supply, energy efficiency and reduction of emissions.

About COGEN Europe:

COGEN Europe is the European association for the promotion of cogeneration. We represent 70 organisations which are National COGEN Associations, manufacturers, users, utilities and service companies. Currently around 100,000 Europeans are employed in the cogeneration sector. More info on www.cogeneurope.eu