If wind farms will get hit hard by renewable energy tariff cuts, then cogeneration plants will suffer serious secondary effects. The sector has calculated that cuts will cause 750 million euros in losses in 2014, although the tariff cuts will just add to 1.2 billion in losses because many tile, paper and iron and steel factories will shut down.
Last year's changes caused a 20% drop in cogeneration energy production in Spain after 650 million euros in funding were slashed. People fear that the other 80% will be lost because the cuts will not only effect how the investment is amortized, but also plant operating costs. The industry is utilizing surplus heat from its manufacturing process to produce electricity. This efficient method of producing power is called cogeneration, or combined heat and power. Subsidies and tariffs in all areas of power production have failed miserably to reduce Spain's dependence on electricity and make costs more competitive. People know that we need to make the system work more cheaply and pay down an unsustainable tariff deficit, but the cutbacks should be balanced out evenly across the various technologies that make electricity.
The cuts affecting cogeneration could hurt energy markets, the environment and nearly 15,000 people who work directly or indirectly for the subsector. The Ministry of Industry should think carefully about the secondary effects that their decision will cause and not make the bulk of their budget cuts in one particular sector.
