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The Spanish government has recently brought forward rathercontradictory policy developments concerning renewable energy sources(RES). On the one hand, the Industry Ministry has presented thecountry’s National Renewable Energy Action Plan. It foresees that, by2020, 22.7% of the country’s final energy consumption will come fromrenewable sources. This is great news, considering that Spain’s RESEuropean Union (EU) target is 20%. On the other hand, the governmentannounced soon after that it would introduce retroactive cuts in thefeed-in tariff program for the photovoltaic (PV) industry in the context of the austerity measures the country is currently undergoing.According to this plan, existing photovoltaic plants would have theirsubsidies cut by 30%, a figure that would go up to 45% for any new large scale plants. Smaller scale roof installations would lose 25% of theirexisting subsidy, while installations with a generating capacity of less than 20 KW would have 5% taken from their tariff.

It goes without saying that, should these measures be finallyimplemented, they would put Spain’s 20% RES target in peril and make itpractically impossible to reach the 22.7% voluntary target by 2020. In a wider context, this would also strike a deadly blow to the solar PVindustry and endanger the development of this type of renewable energysource altogether, which would in turn seriously affect Europe’stransition to a low-carbon economy. The development of solar PV energyin Spain is widely considered to be fundamental to the achievement of an EU-wide low-carbon electricity generation system – a recent study put forth by the European Climate Foundation and McKinsey & Co.determined that, in order to expand the use of RES for electricitygeneration in Europe, massive amounts of solar electricity will have tobe generated in the sunny Southern Europe and distributed across thewhole continent.

Not surprisingly, the Spanish solar PV industry has strongly reactedto this announcement and is currently engaged in discussions with theSpanish authorities regarding this issue. It has been reported that thegovernment is considering softening its stand and introducing lightercuts — not retroactively – meaning that they would only apply to newinstallations and not to those that already exist. However, this hasstill not been officially confirmed.

As a company committed to the development of clean energy, we areseriously concerned about the devastating effects these measures couldhave. Any cuts in Spain’s feed-in tariff scheme for solar PV will leadto a loss of investors’ confidence, something that is simply fundamental for the expansion of this industry and therefore for the development of a low-carbon electricity generation system that contributes to abatingclimate change and increasing energy security. For this reason, we hopethat the Spanish authorities take a more responsible approach towardsthis matter and keep the current feed-in tariff scheme untouched.

Feed-in tariff schemes are policy mechanisms designed to encouragethe adoption of RES and to accelerate the move toward grid parity byguaranteeing purchase prices that are methodologically based on the cost of renewable energy generation. Thanks to this, the competitiveness ofsolar PV energy has dramatically increased in the last years. It isimperative that such schemes are kept in place until renewable energysources are in a position to compete freely with traditional sources ofenergy.

The only way for the RES industry to move forward is through stableand predictable policy frameworks that provide subsidies designed toincrease their competitiveness, like feed-in tariffs – in one way or the other. Only this way will the right investments be made and theindustry will grow.


Accounting for over half of the world’s solar energy in 2008,Spain’s government subsidies have now all but dried up, creating arenewable-energy collapse with rippling effects into the globalsolar-production industry. What a difference a year can make. The continuous flux in the globaleconomy has caused the Spanish government to slam its doors onpreviously generous funding of renewable energy projects. But whatmakes matters worse is the far-reaching effects of Spain’s clamp down.

Factories world-wide that previously ramped up their production ofsolar-power components found the demand for solar panels had plummeted,leaving a glut in supply and a significant drop in prices. Job cutsfollowed.

Spain’s solar ambitions started as an outgrowth of its earlier pushto become a global player in wind power–something it succeeded at. Byoffering generous long-term support for wind power, Spain became aworld leader. Companies such as Iberdrola SA (MCE:IBE) and Gamesa Corp. (MCE:GAM) catapulted from their home markets to the U.S.

Wind energy was a cheaper renewable option than solar, so theSpanish government sought to make solar power more attractive byincreasing subsidies, just as other countries, particularly Germany,were scaling back support.

As a result, Spain’s solar capacity last year increased to 3,342megawatts from 695 megawatts, the size of a coal plant, a year earlier.Government subsidies for solar power jumped to €1.1 billion ($1.6billion) in 2008 from €214 million in 2007.

But solar is an expensive technology, moreso than wind–and requiresa lot more land. The cost proved to be too much. Solar power in Spain”was a financial product, not an energy solution,” says Ignacio SánchezGalán, chairman of Iberdrola.

Faced with the unraveling world economy and a deepening budgetdeficit, the Spanish government late last year reduced the money itpaid for solar electricity and capped the amount of subsidized solarpower installed each year at 500 megawatts. Spain’s solar-powercapacity has actually shrunk as a result.

Spain is providing important lessons for the U.S., where lawmakersare engaged in a debate about how to support renewable energy. Boostersof clean energy, including President Barack Obama, have pointed toSpain as a success story showing how government policies jump-startedrenewable energy, created new industries, and helped the environment.

Source: The Wall Street Journal

Ashort-story and screenplay writer who has won awards for his work,Harry has recently shifted focus to society’s role in bettering theworld. For him, this means a keen interest in sustainable living, whichalso includes renewable energy.

Original Article on EnergyBoom

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