This case concerns Spain’s alleged breach of the fair and equitable treatment (“FET”) standard under the ECT by fundamentally changing the renewable energy incentives regime under which Novenergia made its investment.
In September 2007, Novenergia acquired and developed seven solar photovoltaic (“PV”) plants in Spain.2 All of these plants were registered in the “Special Regime” under Royal Decree 661/2007 (“RD 661”), an incentives regime enacted by Spain to attract significant investment in its renewable energy sector. The Special Regime provided attractive feed-in tariffs (“FITs”) to PV investors for the production of renewable energy. Moreover, RD 661 guaranteed the incentives for a specific period; for example, in the case of PV plants, the regime guaranteed fixed FITs for the entire life of the facilities.3
From 2010 onwards, Spain began adopting a series of measures that modified the Special Regime and reduced the amount of support to renewables (the “2010 measures”). Between 2013 and 2014, Spain introduced additional measures that effectively abolished the Special Regime and introduced a brand new compensation system that was applied retrospectively to Novenergia’s plants (the “New Regime”).4