Over the last several months the Spanish government has been negotiating with the wind power industry group Asociación Empresarial Eólica (AEE) in an effort to reach a compromise over proposed reductions to renewable energy subsidies.

Renewable generation accounted for 18.8 percent of total energy generation in Spain last year, which the Ministry of Industry says is proof that the current levels of subsidies are not necessary.

The AEE on the other hand points to the European Commission's goal of meeting 20 percent of energy consumption from renewable resources as a reason why the current subsidy levels must not be reduced.

The group argues that it is willing to accept some subsidy reductions for future projects, but calls on the government to keep subsidies stable for projects already under construction.

According to the EU's Renewable Energy Council, wind power generation has been growing at an annual rate of 30 percent over the last eight years. Most of this growth is concentrated in Europe, which has 70 percent of the world's capacity.

In mid-May the Spanish Ministry of Industry submitted a draft proposal to the Council of Ministers in which subsidies for renewable energy are to be cut to 29.29 Euros per Megawatt hour (MWh) from 33 Euros/MWh. On 25 May the Council of Ministers approved the proposal, meaning that it will become law on 1 June.

The secretary general of AEE, Ramon Fiestas, had called the draft proposal a "monstrous regulatory error" that will "compromise the development of wind energy" in Spain. The group also complains that the draft proposal includes subsidy levels in an annex and not in the text of the proposed regulation. According to critics, this would allow the ministry to change the rates every year, adding further instability to the scheme.

However, other industry groups, such as the Asociación de Productores de Energías Renovables, a renewable energy producer's group, supports the new decree, calling it a very positive text that would bring stability to the sector. Similar remarks were made by the Asociación de la Industria Fotovoltaica, an industry group representing solar-power producers.