The European Commission is set to approve Spain's application to subsidize the priority use of domestic coal in electricity production, a source in Brussels told Platts Monday.
"We believe the EC is going to approve this on Wednesday," the source said. "Aid would be approved on a strictly time-limited basis to end-2014 and no further."
Approval is likely to be based on EC acceptance of Spain's argument that power stations using indigenous coal are needed to balance a system heavy with intermittent renewables until extra transmission capacity across the Pyrenees is completed, the source said.
A European Commission spokeswoman said reports of a decision pre-empted the weekly EC meeting to be held on Wednesday, and advised waiting for the results of the meeting.
Environmental group WWF said Monday it was disappointed by reports of the Commission's decision.
"[It] is a setback for the internal energy market and consumers," WWF said. "The Commission must ensure aid is kept to a minimum and ends on time."
In February the Spanish government adopted a royal decree to fix prices and prioritize dispatch at 10 coal-fired power stations using domestic coal.
The power stations are Anllares, Compostilla, Elcogas, Escucha, Guardo-2, La Robla-2, Narcea-3, Puntenuevo-3, Teruel, and Soto de Ribera-3.
In the decree, the government cited the importance of keeping open the option of domestically produced fuels to ensure security of electricity supply.
The plan is to cost an estimated Eur800 million ($1 billion) over three years, according to Spain's energy regulator CNE.
On September 21, environmental group WWF said Spain's justification of aid on security of supply grounds was invalid.
According to Spanish grid operator REE, Spain has been a net exporter of electricity for at least the last six years, WWF said.
"Given such an excess of electricity--which also predates the current economic downturn and the associated fall in electricity demand--the claim that electricity supply on the Spanish system is at risk of interruption due to insufficient generation, or that it is likely to become so, is not credible," it said.
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