JAN 23

At the beginning of 2008, the government of Spain (a very sunny country) created a year-long law that required power utilities to buy solar power at premium rates. This made solar power competitive with all other sorts of power...but only for one year.

The result was an enormous explosion in installed solar capacity, over 3 gigawatts in one year, enough to displace up to five coal-fired power plants. This number was far higher than analysts had predicted, but it comes at a significant cost, and not just to people's electricity bills.

Now that the subsidy is being rolled-back, the artificially inflated solar market in Spain is reeling. Oversupplies of panels are driving prices unprofitably low and installers are scrambling for work. Worse, many installations are lying about whether they were finished by the subsidy's deadline, effectively attempting to defraud the government.

The subsidy will only apply to 500 MW of solar this year, and the premium utilities are required to pay has been lowered. It will be interesting to see if the market is able to cope with this kind of crazy tampering. And while the over-supply of panels remains, no one is expecting the solar market to grow as quickly as it did last year.

But let this be a lesson to Obama, if he wants to really stimulate the solar market in the U.S.. Just keep an eye out for some unintended consequences.

Via GreenTechMedia

Comments (10)

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written by Maria (BCN), January 24, 2009

Well.. I agree, our goverment is always making this kind of mistakes, and I hate it. But Spain is not just a sunny country, in fact, now its really cold and snowing in half the country, you kind of diserved me with that topic comment....

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written by Maria (BCN), January 24, 2009

Sorry.... disappointed*****
Yeah... my english needs to be improved....

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Different ways of measuring results
written by Enrique, January 24, 2009

While it might be true that solar is not competitive yet with coal, Imagine all those healthy families which won't be sick from pollution.
How much saving will that add to the GNP of Spain?
5 coal plants out of commission.

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Spain's solar doesn't look good ...
written by tsunamo, January 24, 2009

That wasn't exactly like that, the old law expired in September 2008, so everybody started in 2007 to spend millions into clean energy. Many instalations didn't make it to the old law, and are being payed lower rates. But that's not the problem we are talking about here, the problem is that if you start your instalation now, you already assume that you are going to be paid lower rates than in 2008, and you agree with that, but the question is : am I even going to be in the 500 MW bonus (answer : not this year), or I am not even going to make it ? So it's not worthy to invest millions of euros in an instalation that you are not even sure that is going to be regulated, that's why the solar energy in Spain has stopped.
If the Goverment payed a little less, but there wasn't limit in the overall instalation, there wouldn't be any problems, but the bonus of installations for this 2009 in full even before starting this year. Electric companies are lobbying to stop solar, because they are the ones that pay the subsidies.
However those companies still get subsidies for burning coal, so what's up Zapatero ?

tsunamo

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The spanish solar boom looked great
written by warperer, January 25, 2009

If you can understand spanish, you have a very simple description of the benefits for the country of the spanish subsidies for the photovoltaic energy. http://ecoalternativa.blogspot...ra-el.html

The real problem is not the cuantity of the subsidies but, as tsunamo said, the amount of power that can be installed each year. The subsidies of the photovoltaic are not payed by the utilities but by the citizens, because there is a tax in the bill for this pourpose. But the uitlities don't want the photovoltaic because is hard to manage (imagine 100.000 power plants) and because they feel as if they are loosing the control of the electricity generation, the same thing that happened with the eolic. At the end, the utilities bought the eolic plants, and now the are leaders in this sector.


warperer

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There is a simple tax tool that Spain or
written by Mehul Kamdar, January 26, 2009

I have been posting this on several websites in the hope that someone would listen - poor, third world countries like India offer 100% depreciation on all renewable energy equipment in one year of use to businesses and homes who use these. This makes subsidies unneccessary and from the second year of operation onwards, since the equipment has depreciated 100% already, profits are guaranteed. I cannot see why this cannot be done elsewhere. Perhaps, the world's wealthy nations need to look at this and learn - they need not be so arrogant that they refuse to look at some things that a vastly poorer nation has managed to get right and use it as an example.

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gdfd
written by gfds, January 30, 2009

I have been posting this on several websites in the hope that someone would listen - poor, third world countries like India offer 100% depreciation on all renewable energy equipment in one year of use to businesses and homes who use these. This makes subsidies unneccessary and from the second year of operation onwards, since the equipment has depreciated 100% already, profits are guaranteed. I cannot see why this cannot be done elsewhere. Perhaps, the world's wealthy nations need to look at this and learn - they need not be so arrogant that they refuse to look at some things that a vastly poorer nation has managed to get right and use it as an example.

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written by bill, February 06, 2009

Most countries offer accelerated depreciation on solar installations. The US allows 50% depreciation in the first year. Profits are not guaranteed even with 100% first year depreciation.

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Engineer
written by Dennis Adams, February 20, 2009

What Spain needs in to do away with the gigawatt utility installations, put the sun in everyone's hands and allow net-back metering like every other civilized country out there. Net-back metering is not allowed here. Installations are either offgrid or selling to grid ONLY. Only the big guys are effectively allowed to play the game and effectively they own the Spanish Sun... for now. Hopefully people will wake up and realize this.

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出会い体験談
written by 出会い体験談, May 07, 2010

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