While the Chinese operations of the Spanish firm Gamesa have been affected by the LCRs in

China, the growth of the company itself can be traced back to the initial LCR for the RE
promotion scheme in Spain. Compared with European first-movers such as Denmark and
Germany, Spain was a latecomer in wind turbine manufacturing. It entered the market in
1994 with an installed capacity of only 73 MW for that year.89 This is the main reason why
many Spanish provinces included an informal, noninstitutionalized LCR as a condition for
project developers to be allowed market entry. Indeed, there is no national LCR policy.90 In
addition to its provincial LCRs (which are often not formalized in legislation, but rather used
when governments decide to grant development concessions), Spain uses FITs to encourage
investments. Although FITs are not coupled with the provincial LCRs, it is an important
policy tool for preserving Spains attractive solar and wind market. However, Spains support
for its RE policy had created a 16 billion debt by 2010.91
Gamesas growth is an important case study for analyzing the potential effects of LCRs. The
company was initially part of a joint venture with Vestas, the Danish wind energy market
leader. With the provincial LCRs, Gamesa grew to become the second-largest wind turbine
manufacturer in the world in 2002.92 Because Spanish provinces used LCRs as early as
1994, the main wind technology developments occurred when Spanish companies like
Gamesa were already established players in the global market. Therefore, Spain is still
considered as an early-mover compared to other jurisdictions such as China. Provinces that
have used LCRs are Galicia, Navarra, Castile and Leon, and Valencia. The first two currently
have regulations mandating 70% local content. It is estimated that the LCR in Navarra has
created 4,000 jobs.93 However, it must be noted that there is a general lack of clarity
concerning the amount of net jobs created by RE development, which is also the case for
LCRs.
At the same time, the provincial LCRs that were catalysts in the creation and development of
Gamesa also created a wind energy innovator, especially since, when the policies were first
implemented, there was still a lot of learning-by-doing potential. Up until 2001, Gamesa was
part of a joint venture with Vestas, which held 40% of its shares. The years between 1994 and
2001 were important for wind energy development, with average turbine diameters growing
from around 50 m to around 110 m. Turbine height, diameter size and related output capacity
were and still are key indicators of technology development and related cost reductions.
During this important period, Vestas transferred up-to-date technology to its joint venture
with Gamesa who held a majority of the shares. Over a seven-year period in which demand

increased strongly as a result of Spanish financial support, Gamesa grew within the joint
venture. When Gamesa went public in 2000, it did not have any proprietary technology, but
only licensed technology from Vestas that was limited to the Spanish market. However, the
company had definitely learned by doing and its technological knowledge had developed
enough to allow it to continue growing alone. Eventually, in 2001, due to increasing strategic
differences, Gamesa bought out Vestas 40% and soon became a competitor of the firm.94
Gamesa itself received the JEC innovation award for wind energy twice, most recently in
2011.95 Although it seems LCRs successfully helped create a strong, innovative player
(Gamesa) at a time when learning-by-doing was still high, the financial support linked to this
type of policy put a lot of pressure on Spains public budget.