The real-estate sector in Spain has one and now the electricity companies want one too. What is it? It’s their very own version of the ‘bad bank’, or banco malo as it is known in Spanish.
This idea is not a new one and has already been proposed to the Government as a way of restructuring the energy sector, reorganizing the 29-billion-euro debt and bringing the industry back into balance.
As with the property sector’s bad bank, the most distressed assets, generally related to the solar energy and renewable energy market, would be transferred over to the bad bank, leaving the sector with room to manoeuvre and work under better conditions.
The renewables sector is due further cuts and it has been suggested that those businesses that would not survive these cuts be thrown in to the new bad bank along with those PV plants which have already failed or gone bankrupt.
Many owners of PV (photovoltaic) plants took out loans which they now can’t pay back due to the continual tariff cuts made to the sector. Half the companies in the sector have gone out of business and those employed in the sector have been reduced from 60,000 six years ago to 7,000 today.
This is the second time that the subject has been aired, although today’s more favourable economic climate and the fact that the property market is now back on track suggest that the proposal could be taken more seriously. The new Secretary of State for Energy, Alberto Nadal Belda, is also more willing to listen to the viewpoints of those in the PV sector than his predecessor.
There have also been rumours that the Department of Public Works and the companies that construct roads and motorways in Spain will unite in order to rescue some of the motorways in risk of bankruptcy.
The Department of Economy has already alluded that the bad bank idea is not a bad one provided that money from the public-funding pot is not used.
However, finding a solution has been handed over to the Department of Industry, who is in contact with the country’s financial institutions to try and find a solution using a monetary mechanism that could refinance the sector in order to avoid collapse.
The Government says that the problem is financial rather than energetic. The tariff deficit continues to grow, basically due to the fact that demand is low as many households and business struggle to pay their bills, which increase every year, and so keep consumption to a minimum.
Another option is to ask for funding from the EU, but many find this an expensive alternative. The majority of companies are in favour of a bad bank for the sector which would restructure the debt, improve the sector’s solvency, reduce the number of lawsuits and lower our electricity bills.