In recent years, I have been studying the development of renewable energy in Spain with the aim of developing a better understanding of energy transitions. My research shows that energy transitions are nonlinear processes that open possibilities for new social arrangements, but it also highlights the ways that such new social arrangements rework inherited relationships of power. In this paper I want to elaborate on this idea by focusing on the way big electrical corporations have been mobilizing the current context of economic crisis to rewrite energy policy. As a result, these big corporations are able to consolidate and extend into the future their position of control over the energy system, understood here to include not only technologies and resources, but also more crucially the social structures and relations of production sustaining their operation (Debeir et al. 1991 [1986]).

The battle to reform energy policy in Spain must be situated in the broader European field. In October 2013, the CEOs of nine leading Eurozone electrical corporations issued a joint press release advocating for the elimination of subsidies to renewable energy, which they considered to be the main cause behind soaring energy prices. This demand represents little less than a demand for the European Union to revise its approach to climate change and renounce its objective of meeting the Kyoto targets set for 2020. Indeed, these corporations argue that respect for the environment should not be achieved at the expense of competitiveness and security of supply. In times of economic crisis, tackling ecological crisis should not be a priority.¹

This is the same line of argument that big electrical corporations are deploying in Spain. The Spanish case, however, is especially interesting because the ingredients that make up this cocktail—economic crisis, soaring energy prices, and renewable energy—appear in a radical form. Since 2006, consumer electricity prices have increased by 70 percent; over the same period, wind energy has become the main source of electrical production, and the current unemployment rate stands at 26 percent. But beyond all this, what makes the Spanish case so interesting is the central role that debt is playing in the current debates surrounding the country’s energy future, for it provides a striking example of how a financialized capitalism works through the production and management of crisis.

Taken at face value, this debt is the result of the fact that over the better part of the past fifteen years, the electricity bills paid by Spanish consumers have not covered the cost of generating and distributing electricity. The result of this series of annual deficits is a public debt that currently amounts to an astonishing €30 billion. Even worse, this debt has been growing more recently at an annual rate of €5 billion. Since this debt is supposed to be repaid through future electricity bills, we can therefore say that Spain represents a unique case in that Spanish citizens and the whole electrical system are indebted to the electricity utilities. The existence of this debt has forced the government to initiate a series of regulatory reforms and has given ample room to electrical corporations to imprint their interests and strategy onto this legislation.

I guess that the reader may be wondering what exactly is this debt and how did it come into existence. This question does not have an easy answer. Indeed, making sense of it is an exercise that borders on metaphysics due to the deliberate opacity, blatant manipulation, contradictory narratives, and financial prestidigitation that surrounds it.² In fact, even understanding the Spanish electrical bill is elusive, and entire TV programs and dozens of websites are devoted to it. So I will make an effort to keep things simple.

What is clear and well known, although often silenced, are the circumstances under which the electrical deficit was first conceived. We need to go back to 1997, when the newly elected conservative government implemented the so-called liberalization of the electricity sector (Gallego and Victoria 2012). I say so-called because in practice, this process was supposed to create a competitive market, but in fact, it consolidated the oligopolistic control of production, distribution, and supply in the hands of five corporations, some of them former public utilities. Furthermore, to this day, the overwhelming majority of Spanish consumers pay the electricity at a regulated (i.e., non-market) price. All this notwithstanding, the ideological stakes of the project were high. The “liberalization” of the electricity sector was in fact a banner project of the government meant to prove that market fundamentalist recipes would benefit ordinary citizens. It was this need to provide the reform with this exemplary value that led to the invention of the deficit: The government and the electrical corporations agreed to mark down the price that consumers would pay for electricity, allowing the government to claim that liberalization improved efficiency and saved money for consumers. The electrical companies financed the ensuing deficit, and the government recognized their right to be repaid in eight years, thus displacing the financial costs of liberalization to future consumers. It is worth noting that, in exchange, the big five companies, commonly known in Spain as the “oligopolio,” received €10 billion, which was also to be paid by the consumers through their electricity bills, in order to compensate them for the possible reduction in profits that the liberalization of the sector might provoke.

The importance of this process of liberalization lies in the decisive role it played in shaping the economic structure of the country. Indeed, together with banks and construction companies, the oligopoly provided the backbone of a financialized Spanish economy whose impressive growth during the decade that followed this process of liberalization rested upon massive urbanization and construction projects (including dozens upon dozens of electrical facilities) and upon the capacity of its new flagship corporations to “reconquer” Latin America (Aguilera and Naredo 2009; López and Rodríguez 2010). Perhaps more importantly, the privatized electrical corporations provided a crucial platform for the interlocking of the state and capital that characterizes the rentier basis of the Spanish economy and its elites. The past three prime ministers and the past three ministers of economy, for example, all serve on boards of the big five energy corporations.

Altogether, the new electricity policy framework created with liberalization ran quite smoothly up until 2006. Electricity prices were kept low, deficits were small, and the development of renewable energy was impressive, greatly exceeding the objectives set by the EU and creating a sector that, at its peak, accounted for 1 percent of gross domestic product (GDP).³ Big electrical corporations, in collusion with construction companies, played a prominent role in the development of renewable energy, becoming global players far beyond the borders of Spain. Crucially, this success allowed them to attract global investors from the conventional energy sector eager to get their foot in the door of renewable. Consider Iberdrola: This corporation is the global leader in wind energy, and its main investor is the Qatari sovereign investment—i.e., a major hydrocarbon energy producer. Two crucial elements need to be emphasized at this point. The growth of renewable energy took place in a context of generalized, across-the-board growth of electrical generation capacity. In other words, and staying with the example, Iberdrola installed in Spain as many megawatts of wind energy as it did from the construction of natural gas power plants. The second key detail is that these big electrical corporations never had a position of total dominance over the Spanish renewable energy sector. On the one hand, alongside the big electrical corporations we can observe the emergence of a new class fraction of medium-sized independent developers, mostly in the wind farm business and very often connected with regional elites. On the other hand, once the housing boom started to show signs of exhaustion, renewable energy attracted thousands of small investors, especially medium landowners who converted their fields into solar farms in search of a safe investment with moderate to high rates of profit (Prieto and Hall 2012).

The entrance of these small investors coincided with, and to an extent helped build, the moment in which the situation started to reach its limits. Around 2007–08, coinciding with the beginning of the crisis, a perfect storm brewed. Electrical consumption plummeted, subsidies kept growing, and deficits started to careen out of control; the State was unable to find ways of financing the electrical debt, while the interest payments for which started to have a sizable impact on electricity bills.

It is in response to this situation that the government has introduced a cascade of regulatory reforms, including proposed legislation, which respond to the interests of the oligopoly.⁴ The proposed law prioritizes the “financial sustainability of the system” and frames renewable energy as responsible for the increasing costs of the system and its current unsustainability, while erasing any reference to “environmental sustainability.”

Now, before proceeding, it is worth asking how much truth there is in the idea, repeated ad nauseam by the big electrical corporations, that debt has grown out of control as a consequence of excessive and misplaced subsidies to what the oligopoly calls “immature technologies.” The precise response to this question is impossible to know, and it is impossible to know because those electrical corporations, together with the main Spanish political parties, have repeatedly blocked all sorts of initiatives to audit the costs of the electrical system. However, we do know that the Spanish electricity bill is a funny mixed bag that includes a wide and heterogeneous list of subsidies, including, among others, production subsidies to renewable energy, hidden subsidies to heavy industry and to nuclear power plants, subsidies to the construction of gas power plants, and subsidies to the extraction of so-called national coal. In addition, if we understand the deficit as having a regulatory, not economic, origin, a strong argument can be made that the deficit is not the result of consumers’ underpayment of electricity but rather of the (regulated) overpricing of the electricity produced through traditional sources (mostly hydro and nuclear).⁵

The new legal framework is clearly oriented toward guaranteeing the profits of the big electrical corporations and to strengthening their oligopolistic position. This is achieved through a twofold strategy. First, this framework maintains the principal invisible subsidies to non-renewable energy (for instance, the cost of the public management of nuclear waste), while semi-paralyzing the development of renewable energy. The new regulation thus guarantees that the big electrical corporations can squeeze the profitability of the non-renewable, mostly nuclear and gas, power plants that they have in stock. Second, the new law paves the way for big electricity corporations to take control of a renewable energy sector that had been growing beyond their expectations and partially out of their control. Through a series of new taxes and changes in the payments to renewable energy, this new regulation has, first, pushed thousands of small investors to the brink of bankruptcy, left without the subsidies on which they had counted when they made their investment; second, it has undermined medium-sized independent wind developers who have subsequently abandoned many projects or sold out their wind farms⁶; and third, and probably most important, it has put outside of the law, and potentially criminalized, domestic auto production. Taken together, all these measures leave the present and the future of the sector in the hands of the oligopoly.

To conclude, I would like to suggest a series of ideas connecting the process that I just described with broader issues of class struggle, the role of the state, the effects of financialization, and environmental crisis. These ideas are offered as open reflections or suggestions for further exploration rather than as closed conclusions.

Drawing inspiration from Timothy Mitchell (2011), I would first like to mention class dynamics and the extent to which they may be rethought in a context of energy transition. Consider the response of two different groups affected by the new law: coal miners and small solar investors. In 2011, the government hinted at the possibility of eliminating subsidies to national coal. The response was immediate, triggering the mobilization of miners from all over Spain, who formed several walking marches of protest that converged in Madrid in the aftermath of the mobilization of the Indignados, placing these miners at the center of the last major round of social conflict in the country. The government heard the message and abandoned the plan. In contrast, when just a few months later the government announced that it would drastically reduce the subsidies to solar farms without prior notice, leaving 30,000 small investors on the verge of bankruptcy, the decision elicited no sizable social mobilization. This example suggests that conventional, centralized forms of energy production create very different conditions for class struggle than renewable energy.

My second concluding reflection relates to the financialization of electricity supply and, more broadly, to the consequences of financialization. Big electrical corporations have been able to mobilize debt in order to be in a position of control over the system. Although a creation of the state, electrical debt has developed a semi-autonomous life, to the point of greatly impairing the ability of the government to set the terms of what in essence is a public service. Crucially, debt is being mobilized to curtail the construction of new energy futures. The best example of this idea is to be found in the heavy tax—derogatively known as impuesto al sol (“tax to/for the sun”)—that the new law applies to domestic production and consumption, making them, in practice, nearly illegal activities. The rationale for this taxation and for the heavy fines associated with them is that consumers have a debt to the oligopoly, so all flows of money and energy must go through them.⁷ All in all, the objective of the regulatory reform does not seem to be to paralyze the development of renewable energy, but rather to make sure that ultimately the oligopoly can control the process and set its timing. Framing the issue in terms of debt and invoking notions of financial sustainability, the oligopoly has been widely successful in legitimating the argument that Spanish consumers are in debt to them, a debt that projects into the future: not only future electricity bills, but the whole energy future is owed to them.

This leads to my third and final concluding remark, which concerns the incommensurability between what the eco-Marxist economist Elmar Altvater (1993) calls ecological and economic modalities of time and space. I’ll put it boldly: Despite the quite astonishing development of renewable energy, Spanish environmental indicators such as CO2 emissions clearly worsened up until 2008; then, suddenly, in 2009 they started to improve (Schneider et al. 2010). The reason is clear: The economic crisis and the ensuing diminution of economic activity. From this perspective, the astonishing development of renewable energy in Spain throughout the first decade of this century appears as an appendage of fossil fuel–based growth rather than a process of energy transition (Hornborg 2011). In other words, this seeming paradox shows that what is most harmful for the environment is growth, and this is a non-negotiable imperative for capitalism. However, the consequences of unplanned “de-growth” can be dire, as the case that I’ve presented attests: dispossession and duress, consolidation of the power position of a rentist oligarchy and, perhaps more importantly, a severe burden upon how a future of planned “de-growth” can be envisaged and democratically imagined.

Jaume Franquesa is Assistant Professor of Anthropology at the University at Buffalo, SUNY. He is currently writing his book Dignity and Power, funded by a Wenner-Grenn Hunt Fellowship.