canary islands next generation funds deadline extension

Canaries Fight to Save €242m in EU Green Energy Funds

Canary Islands Push for Crucial Deadline Extension on EU Funds

The Canary Islands government is urgently pressing Spain’s Institute for Energy Diversification and Saving (IDAE) to grant a two-year extension for executing Next Generation EU funds earmarked for decarbonisation. Officials in the regional Ministry for Ecological Transition and Energy warn that Madrid is now seriously concerned about an issue that could lead to the loss of €242 million, allocated across more than 1,200 projects.

An Unworkable Timeline Threatens Green Projects

While all the funding has been processed, every application with fully justified grants must be sent from the Canaries to the central administration by June. This requires the projects themselves to have been completed. Managing nearly 27,000 files has revealed that the granted deadline does not match reality. The ministry is finalising the paperwork in these weeks, leaving the aid recipients with no time to implement their proposed projects. The local business sector is also overwhelmed.

Photovoltaic panel installers cannot keep up with intense demand concentrated into such a short period. Furthermore, finding trained workers has proven impossible. The IDAE – which depends on the national Ministry for Ecological Transition – is aware of the problem due to continuous communication with the Canarian ministry, led by Mariano Hernández Zapata, over recent months. “They are now starting to worry about the situation,” states Alberto Hernández, the Director General of Energy for the Canary Islands Government.

A Precedent for Extension and a Dual-Path Proposal

Last December, the IDAE successfully negotiated with Brussels for a two-year extension on projects it manages directly, including those aimed at exploring geothermal energy in the Archipelago’s subsoil. The Canary Islands Government argues that the rest of the aid should follow the same path, but the IDAE has denied this possibility for months. “In the last meeting, we presented them with the legal strategy to adopt, and now they have asked us for the details,” explains Hernández. The two administrations are now speaking the same language, leading to a plan sent by Councillor Zapata to the IDAE’s Director General, Miguel Rodrigo, on Wednesday.

The goal is to salvage 170 megawatts of renewable power capacity and another 140 megawatt-hours of storage. Madrid is not blind to the special difficulties in rolling out renewables in the autonomous community, so letting this opportunity slip away should be completely ruled out. This is especially true given that the recent US and Israel attack on Iran has sent oil prices soaring – oil which still carries excessive weight in electricity generation in the Canaries. Worse, a hydrocarbon shortage caused by a closure of the Strait of Hormuz could endanger a supply that is utterly strategic, both for power generation and for the desalination plants that depend on it.

The Plausible Path Forward

However, including the execution deadline extension among measures to be approved by the Council of Ministers this Friday is considered unlikely. The submitted proposal has a dual track. The most desirable option for the Canarian energy director is a two-year extension for justifying all projects, “as the IDAE has done with those it manages directly.” However, there is little confidence this will succeed, as the body led by Rodrigo just secured its two-year grace period from Brussels and is unlikely to knock on that door again so soon.

The other, more plausible path involves extending the execution deadline only until 31st July for projects considered key, which would allow 66 megawatts of renewable power to come online. Adding the contribution from the Balearic Islands, which is in the same situation and aligned with this strategy, would reach 128 megawatts. This would prove to the European Union (EU) the relevance and utility of the aid, and the best way to convince it that an extension is vital.

The remaining projects, which contribute another 105 megawatts in the case of the Canaries, would have a new execution deadline of the last day of 2028. This would, however, require modifying a royal decree (451/2022) and enabling a new funding stream; the aid would now be paid from the REPowerEU programme. The case to Brussels is twofold: first, to explain that the delay is due to problems beyond the aid beneficiaries’ control, and second, that not changing course would mean losing already-awarded investments and a significant portion of the funds enabled to drive a decarbonisation process that would be severely damaged.

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