UNCLAS SECTION 01 OF 02 MADRID 000014

SIPDIS

STATE FOR EUR/WE, EEB/IFD/OMA
STATE PASS USTR FOR D.WEINER AND J.GROVES
COMMERCE FOR 4212/DON CALVERT AND 6990/R.LAYTON
TREASURY FOR OAI/OEE R.JOHNSTON
ENERGY FOR PIA:K.BALLOU

E.O. 12958: N/A
TAGS: ECON EINV ELAB ENRG ETRN SP
SUBJECT: SPAIN ECONOMIC ROUNDUP, DEC.28 - JAN.8

REF: MADRID 1214

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Contents:

ELAB: Unemployment Continues to Rise
ECON: 2009 Inflation Estimated at 0.9%
ENRG: Wind Power Grew in 2009, as Did Renewable Energy Bill
EINV/ENRG: Iberdrola Receives Hundreds of Millions in USG
Funds
ENRG: Iberdrola Leads Large Marine Energy Research Project
EINV: Spanish Companies Among Top Transportation
Infrastructure Investors
EINV: ACS Buys U.S. Construction Company for $131M
ETRN: Fewer Highway Deaths, Again

Unemployment Continues to Rise

1.(U) The number of registered unemployed rose by 50,000 in
December, the fifth consecutive monthly increase. For all of
2009, the number of registered unemployed rose by nearly
800,000, on top of a 2008 increase of almost one million.
Nearly four million Spaniards are registered as unemployed
(and not all unemployed Spaniards are registered). In a
separate report, Eurostat said Spain's unemployment rate rose
to 19.4% in November, the EU's second highest rate. (El Pais,
1/5; Expansion, 1/8)

2009 Inflation Estimated at 0.9%

2.(U) The National Statistics Institute estimated 2009
consumer price inflation at 0.9%, the lowest full-year figure
on record. The low rate means that inflation adjustments in
many wage contracts will not be triggered. (El Pais, 1/5)

Wind Power Grew in 2009, as Did Renewable Energy Bill

3.(U) Wind power generation increased by 15% in 2009 and
accounted for over 13% of total electricity generation.
Spain,s main electricity sources are natural gas, nuclear,
wind, coal (down 27% in 2009 after declining 35% in 2008),
and hydro. However, total premiums incurred during the year
for renewable energy under the GOS, generous feed-in tariff
system reached 5.4 billion euros, well over the 4 billion
euros predicted at the start of the year. The difference,
mainly due to more solar projects coming on line than had

been expected, will put further pressure on regulated
electricity rates, which the GOS has agreed to gradually
increase in order to eliminate the difference between what
consumers pay and what the generating companies are owed.
(Red Electrica de Espana figures; El Confidencial, 1/8)

Iberdrola Receives Hundreds of Millions in USG Funds

4.(U) Iberdrola received $703 million in USG incentives
during 2009 and hopes to receive another $430 million in
2010, according to the company. Most of the incentives went
to the company,s separate renewables division, Iberdrola
Renovables, for wind energy projects. These incentives,
contained in U.S. stimulus legislation, cover approximately
30% of the cost of the projects and substitute for a
longstanding production tax credit. Iberdrola Renovables
received more than half of all such USG incentives for wind
projects in 2009. It says it will reinvest in the U.S. all
such incentives it receives. The company has 3,459 MW of
wind capacity in the U.S., making it the country,s second
largest wind power generator. Separately, Iberdrola,s U.S.
subsidiary received $96 million for the design of intelligent
networks, and the company has been awarded $30 million for an
electricity storage project. (Expansion, 1/7, La Razon, 1/7)

Iberdrola Leads Large Marine Energy Research Project

5.(U) Iberdrola's engineering arm will lead a consortium of
19 Spanish companies and 25 research centers in what is
reported to be the world,s largest R&D project on marine
energy. The three-year &Ocean Leader8 project will study
ways to lower the costs of generating energy from ocean
sources, such as waves and currents. The project has a
30-million-euro budget and has already received a
15-million-euro grant from the Center for Industrial
Technology Development and the government,s stimulus fund.
It has also been chosen for funding from the Cenit-E program
of the National Plan for Scientific Investigation,

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Development and Technological Innovation. (Expansion, 1/8)

Spanish Companies Among Top Transportation Infrastructure
Investors

6.(U) Spanish infrastructure companies held six of the top
eleven slots in an annual, global ranking of transportation
infrastructure investment published by U.S. newsletter Public
Works Financing. Ferrovial-Cintra ranked in first place,
with investments totaling over $77 billion since 1985 and a
presence in 49 countries, including toll road concessions in
the U.S. Other top Spanish companies are: ACS (third, $35
billion), Abertis (sixth, $21 billion), OHL (eighth, $15.5
billion), Global Via (ninth, $15 billion), and Sacyr
(eleventh, $9 billion). ACS also owns a 30% share in the
German company Hochtief, which ranked fifth with $28 billion
in investments. (El Pais, 1/7)

ACS Buys U.S. Construction Company for $131M

7.(U) ACS announced on January 4 its purchase of the New York
company John P. Picone for $131.7 million. The company
specializes in public works, especially tunnels and water
infrastructure. This is ACS, third U.S. purchase in a
little more than a year, after paying $150 million for
Schiavone in late 2008 and $114 million for Pulice in
December 2009. (El Pais, 1/5)

Fewer Highway Deaths, Again

8.(U) 1,897 Spaniards died in highway accidents in 2009, the
sixth consecutive year that fatalities have declined. The
number of highway deaths has been cut in half since 2003
despite a 24% increase in the number of vehicles. Among the
factors credited for the decline are the introduction in 2006
of a points system that leads to the suspension of repeat
offenders, licenses, stiffer penalties for dangerous
driving, more active enforcement, and public awareness
campaigns. (El Pais, 1/2)
CHACON