'We'll take a hit': why Vestas and tennis ace Nadal face wind power paralysis in Spain's northwest

An estimated 3GW of onshore wind capacity has been thrown into limbo by a tangle of environmental objections in Galicia, an autonomous region of northwest Spain where judges have granted a raft of injunctions in conflict with a federal initiative to streamline permitting for renewables.

The willingness of Galician judges to grant injunctions on environmental grounds has so far brought an estimated 33 wind farm projects to a shuddering halt, with €4.2bn ($4.5bn) worth of investments potentially affected, according to the Spanish Wind Energy Association (AEE).

Most of the injunctions have been granted in favour of regional environmental groups such as the Galician Ecological Defence Association (Adega) and Galician Ecologists in Action (Atlantic Green).

Some of these claims were on procedural grounds — especially relating to environmental impact assessments (EIAs) — as well as interpretations of environmental risk criteria.

The injunctions have caught out developers and suppliers alike, effectively paralysing the authorisation procedures for scores of wind farms that were supposed to be going through the construction pipeline.

The list of affected developers reportedly includes names such as Enel, BayWa r.e., Capital Energy, Greenalia Power, Naturgy, Eerus Energy and Acciona Energy.

A host of affected projects promoted by domestic companies includes two backed by the family of tennis star Rafael Nadal via the ‘Wind Hero’ and ‘Wind Grower’ consortia.

This outcome is particularly frustrating for the wind industry because Spain’s government last year won legislative approval for measures that purported to bypass requirements for EIAs at the local level, creating instead a streamlined federal process for any wind farms over 50MW in capacity.

These measures were drafted as a means of accelerating the renewables ramp up and were an aspect of Spain's increased focus on energy security in response to the war in Ukraine.

With Galicia's own wind energy association suggesting that it will take up to two years to rule definitively on the environmental procedures in question, the impasse is impacting suppliers to such an extent that some of the exposed companies are bracing themselves to take a significant financial hit next year.

Vestas vexed

While wind developers are used to wrestling with environmental permitting delays in European markets, these activist judicial interpretations of environmental safeguards are having a powerful effect of their own in Spain, warns Jose Luis Jimeno Gutierrez, senior vice-president for Mediterranean, Africa and the Middle East with turbine maker Vestas.

Over the best part of three decades, Spain has been one of the most successful European nations when it comes to deploying renewable energy capacity, he notes, and with Galicia seen as an attractive region with under-developed potential for onshore wind, the wave of judicial obstacles has taken many investors by surprise.

Unexpected delays in a mature market such as Spain tend to impact firm orders and, with a market share of about 33% last year and a major manufacturing facility near Ciudad Real, Vestas is one of the companies exposed.

He declined to comment on the projects, orders or customers involved, but said tellingly: “This impacts our revenues heavily because it affects projects that were supposed to be landing in the [profit and loss statement] next year.

“When one of those projects stalls after becoming a firm order, of course there are some commercial costs, and there is a discussion that we need to have with the customer.

“We're always trying to reach an agreement that is good for both parties…most of the times the projects are delayed, not cancelled. It's mainly about timing."

ECJ referral

Galicia's High Court has continued to uphold injunctions, although a court of appeal in Madrid had overturned one of them.

The overturned injunction in question was halting Enel's 90MW Badulaque wind farm, which has an offtake agreement with Alcoa's closure-threatened San Cibrao aluminium refinery.

The Madrid court took the view that an injunction was not required to prevent irreparable damage to the environment, or to protect environmental rights, meaning construction could continue until the case is heard on its merits.

Separately, however, Galicia’s High Court has referred the issue to the European Court of Justice, seeking interpretation on whether permitting procedures require, as a matter of European law, prior completion of environmental impact assessments before public consultation can begin.

While the AEE is confident that the ECJ will not rule in a way that could leave established projects right across the Europe Union vulnerable to new legal challenges, the association has warned about the severe delaying effect of the case going to European law and also begun lobbying for permits on scores of Galician projects to be frozen in time so as not to lose validity.

The judicial activism, which took account of an upswell of opposition in some rural communities, has been criticised by wind sector lobbyists in Spain, with Galicia’s own wind industry association arguing that the courts were condemning the region’s energy sector to "another two years of stagnation".

“The one legal certainty that we have is that it will be impossible to implement a single wind farm in Galicia now, meaning that industrial and investor flight will continue," the Galician wind association statement read.

The AEE said "a massive judicialisation of projects has immersed Galicia in a situation of uncertainty."

With more cases still to be heard by the courts in Galicia, the AEE warned that between 60 and 70 wind farm projects could be affected, representing 3GW of capacity and investments of up to €4.2bn.

Spreading problem?

Environmental groups have sought injunctions on similar grounds in Cantabria, another autonomous region, further east along Spain's picturesque northern coast.

In one such case, construction on Iberdrola’s 105MW El Escudo wind farm is set to begin on just three of the four municipalities involved due to a local ruling that the project would impact protected rural land.

Gutierrez said he worried that the appearance of such problems so late in the date has an effect on investor confidence. “The big issue in these cases that they are halting things so late in the process,” he said.

"Something needs to be done. I don't think we just live with the fact that somebody can stop a project at any point in time... We are trying to make our best guess on which projects will go forward or not and put together a forecast that we think is going to be close to reality."

Another leading turbine supplier into the Spanish market is Nordex, which has extensive manufacturing and service facilities in the country.

Spanish targets threatened

Two decades ago, Gutierrez recalls, Spain was a European frontrunner in terms of renewables development in Europe, and came second only to Germany in terms of wind power.

Onshore capacity swelled to 23GW before the financial crisis of 2008 and the removal of generous subsidies thereafter.

Spain is supposed to be going back to those lofty growth rates now.

In June 2023, the Spanish government issued its revised National Integrated Energy and Climate Plan (PNIEC), targeting a 32% reduction in greenhouse gas emissions by 2030. up from a previous goal of 23%.

Within this target, Spain is promising a 32GW increase in wind power capacity between 2023 to 2030 in order to reach 62GW, as well as a 56GW deployment of new solar capacity.

“Adding 32GW of wind energy in seven years means installing 4.4GW of wind capacity annually. At the current pace of 1GW per year, we will not make it,” said Gutierrez, who is Spanish.

Last year was a particularly disappointing one for the Spanish wind sector, with barely 600MW installed, albeit with around 1.7GW of firm orders in the background.

“The (backlog of orders) now shows that the market has been reactivating, but it is still far from the targets established by the PNIEC,” Gutierrez added.

Gutierrez also points out that Spain held its last wind auction in November 2022, awarding only 45MW of wind capacity.

The Spanish lag is not untypical of what is reported across Europe as a whole, with the rate of new wind power installed in 2023 (18.3GW) running far short of what is targeted.

“About 16.2GW of this total was among the EU’s 27 member states, but this is only half of what is needed to meet 2030 climate and energy targets," said Gutierrez.

Permitting delays, grid bottlenecks and the auctions that encouraged a “race to the bottom” on prices are rightly blamed for this, Gutierrez said, but he adds Spain is an example of a country where an increase in legal uncertainty has emerged as a worrying new trend.

The federal government's 2023 environmental permitting initiative amounted to a major push to install what Gutierrez called a "massive amount of gigawatts."

“There is plenty of political will to foster renewables in Spain, and this can be found across the political divide, on the right and left,” he said.

“On a national policy, we are seeing all things you would ask for, like becoming a signatory to the European Wind Charter, but the problems arise when it gets down to the next level… when these plans hit the ground.”