Spain Ejects Green Energy Lobby
by Alex Morales and Ben Sills, Bloomberg
Spanish renewable-energy companies that once got Europe’s biggest subsidies are deserting the nation after the government shut off aid, pushing project developers and equipment-makers to work abroad or perish.
From wind-turbine maker Gamesa Corp. Tecnologica SA (GAM) to solar park developer T-Solar Global SA, companies are locked out of their home market for new business. These are the same suppliers that spearheaded more than $69 billion of wind and solar projects since 2004 that today supply more than 50 percent of Spain’s power demand on the most breezy and sunny days.
Saddled with a budget deficit more than twice the European Union limit and a ballooning gap between income and costs in its power system, Spain halted subsidies for new renewable-energy projects in January. The surprise move by Prime Minister Mariano Rajoy one month after taking office helped pierce investor confidence in stable aid for clean energy across Europe.
“They destroyed the Spanish market overnight with the moratorium,” European Wind Energy Association Chief Executive Officer Christian Kjaer said in an interview. “The wider implication of this is that if Spanish politicians can do that, probably most European politicians can do that.”
Spain’s $69 billion of investment in power capacity from 2004 to 2011 was about triple the spending per capita in the U.S. in that period, according to Bloomberg New Energy Finance data and U.S. Census Bureau population estimates. Most of the 2012-2013 spending will be for the legacy of projects approved before the aid cuts to wind, solar, biomass and co-generation.
…
After four successive reductions in subsidies since then, the government on Jan. 27 this year announced the moratorium on aid for new projects. The next month Spain saw itself drop out of the 10 most attractive markets for renewable-energy investors for the first time, due to reduced aid, on an Ernst & Young ranking. Spain led the list from October 2003 through July 2006.
“What happened in Spain is that abruptly, they changed the industry by changing the policy, and that doesn’t help build a sustainable industry,” said Stephan Ritter, general manager of General Electric Co.’s European renewables unit.
Full story here at Bloomberg
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Regarding that last line from Stephen Ritter….who seems clueless about “sustainability”…
A sustainable industry is one that stands and competes on its own, not one that is dependent on the government teat.
Related articles
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- Gas rebranded as green energy by EU (guardian.co.uk)
“What happened in Spain is that abruptly, they changed the industry by changing the policy” very well said. This is exactly what happened, and I´m a Spaniard. If you follow the money you can get some answers. There is always people dancing around government regulations. It’s not surprising that the people that were before in the Real State bubble moved into solar farms, and all the renewable blah blah blah. They were dancing again, looking for subsidies, profits guaranteed by law, solutions helped by regulations to fix a non existing problem, etc.
“What happened in Spain is that abruptly, they changed the industry by changing the policy, and that doesn’t help build a sustainable industry,”
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sustainable = endless supply of government (other peoples) money.
woodNfish says:
May 30, 2012 at 10:58 am
“…wind and solar projects since 2004 that today supply more than 50 percent of Spain’s power demand on the most breezy and sunny days.”
This is probably pure BS, and if it is ever true, is so infrequent as to be inconsequential.
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It is BS, because on those days the extra supply of electricity will drive the spot price of electricity negative. Spain will be paying neighboring countries money to take the power off their hands, while at the same time paying the green producers subsidized rates to churn out as much as possible.
Everyone forgets about supply and demand when they do the costings. Remember the Goldilocks problem. To much or too little of anything is bad. Only when power supply is exactly balanced to demand is it “just right”.
http://www.bloomberg.com/news/2010-04-22/windmill-boom-curbs-electric-power-prices.html
Negative Prices
“Negative electricity prices happen when supply outstrips demand and we literally don’t know where to put it,” Peter Smits, head of central Europe at Swiss power-equipment maker ABB Ltd., said in an interview on April 20 in Hanover. “We will see this happen more often in the future.”
Spanish Spring anybody?????.
Speaking of green energy, my sister-in-law sent me an email asking me if this was for real. A little off topic, but good for a laugh!
http://cogarinternationalenergy.com/index.php
Funny, EE Times just had a PR piece on how the cost of solar was at parity with fossil fuel generated electricity now. What, you mean $0.44/kWh peak pricing in Australia isn’t a valid comparison? How about electricity supplied by diesel generators? No? Oh darn. Well, maybe next year!
“What happened in Spain is that abruptly, they changed the industry by changing the policy, and that doesn’t help build a sustainable industry,” said Stephan Ritter, general manager of General Electric Co.’s European renewables unit.
It’s not the government’s job to change the industry, Stevie-boy — it’s *yours*.
And you obviously failed at it.
* * * * * * * * * * * * *
rogerknights says:
May 30, 2012 at 1:35 pm
Remember when Spain was the poster boy for renewables, the model for the rest of us? It was less than four years ago that Obama officials were pointing to it as a success story.
Two years ago, they were pointing at Solyndra and Ener1 and Evergreen Solar and a dozen other failed companies as the harbingers of green triumph and the Chevy Volt as the lead vehicle in Obie’s pledge to have a quarter million electric and hybrid vehicles on the road by 2015.
Yeah, that went well.
George E. Smith; says:
May 30, 2012 at 10:40 am
“When land becomes free, and land improvements are immune to property taxes, then this could be a winner.”
I found this short story about one of our own bigger boondoggles interesting.
http://www.technologyreview.com/energy/40460/?p1=A1
This para in particular
“The project has been a long time coming. BrightSource first filed an application for the project in the summer of 2007. Approval took three years. Construction was temporarily slowed to accommodate the care and relocation of desert tortoises—a threatened species—found in larger numbers than expected. The project, which will generate electricity by using mirrors to concentrate sunlight to heat up water and drive steam turbines, is now expected to be finished next year.”
It seems there may have been a hopeful development in government regulatory policy. Evidently now if you want to go forward with a project you have planned and a few inconvenient members of some endangered species turn up on your proposed site, all you have to do is round them up, pack them up, and ship them out to someplace elsewhere and you are good to go! Obviously this precedent means this standard will now prevail across the country and the economy I’m sure.
Gary Meyers says:
May 30, 2012 at 7:57 pm
Speaking of green energy, my sister-in-law sent me an email asking me if this was for real. A little off topic, but good for a laugh!
http://cogarinternationalenergy.com/index.php
A pretty elaborate set up for a gag. I couldn’t help wondering how many pigeons actually have sent in a check.
vboring says:
May 30, 2012 at 9:10 am
“If this were an intentional strategy, it would be brilliant:
1) Temporarily subsidize capital-intensive renewables with a feed in tariff to get lots of stuff built.
2) Stop the subsidies for all projects, existing and new
3) let companies go BK and let banks silly enough to lend to them eat the losses
4) solar and wind plants get bought from bankrupt companies for their fair market value and produce low cost energy”
That would be brilliant if step 3 worked.
Step 3 enables the banks to take the high start up costs and the country (Government) the lower operating costs.
But the banks are going bankrupt in Spain and need bailing out by… the Government (that is the people’s taxes).
Of course, if Spain can get the EU (Germany) to bail out the banks then it would work.
Then it would be brilliant indeed (except for Germany).
I have just returned from a trip to Spain and one view over the Ebro valley we could see nearly 100 wind turbines none of which were turning.
What has happened in Spain shows that if subsidies are removed the industry fails which proves that the industry was rubbish to start with.
A sustainable industry is one that does not need any subsidy which makes the renewable industry unsustainable.
Dave Wendt says:
May 30, 2012 at 10:10 pm
A pretty elaborate set up for a gag. I couldn’t help wondering how many pigeons actually have sent in a check.
If there’s still money remaining in the US Treasury, then Obama has obviously not seen it yet…
Dave Wendt says:
A pretty elaborate set up for a gag. I couldn’t help wondering how many pigeons actually have sent in a check.
I’m not sure this is intended as a gag – the only real clue is the page saying he “broke the laws of physics”. But people believe they can do that sort of thing. Will be interesting to see what happens with the June 9 “press conference”
I guess they call green energy “sustainable” because in theory the primary resources (wind and sun) are limitless. However, an industry that cannot stand on its own two feet and be competitive in an open market is not a sustainable industry!
That description fits Green energy well – it is inefficient and not cost competitive, and cannot be marketed to cost-conscious consumers without huge government subsidies. This approach obviously has not worked out very well in Europe – they may or may not be decreasing their “carbon footprint”, but these subsidies are clearly decreasing their national treasuries and economic stability! We are taking it one step further in the US – not only are we giving huge subsidies to green energy producers, but we are also waging a regulatory war on traditional energy producers in an effort to drive up their costs and hence make green energy seem less unpalatable. Forcing consumers to pay more for less rarely, if ever, improves economic conditions. Good products succeed in the marketplace because consumers get some combination of “more or better” for their cost. The corruption, backroom cronyism, and corporate failures associated with the green energy industry in the US are warning signs that should be heeded before we get in as deep as Spain was with this boondoggle.
I have nothing against alternative energy. If and when the time comes that it is efficient and cost competitive with traditional sources, I will embrace it. However, the industry needs to compete on its own merits, not by forced consumption due to government intervention. For the time being, green energy needs to remain the plaything of the rich who wish to ease their environmental conscience, rather than being forced upon consumers that cannot afford it at great expense to both government and consumer!
I have a small issue with the headline. “Take Off” could be interpreted as either “skedaddle” or “accelerate”, i.e., opposite meanings, although the possibility that the removal of subsidies generated an entrepreneurial surge in profit-motivated creativity leading to an acceleration of green power activity did seem a bit remote. Lots easier to envision the takers heading for the hills.
“”””” Gary says:
May 31, 2012 at 7:03 am
I guess they call green energy “sustainable” because in theory the primary resources (wind and sun) are limitless. However, an industry that cannot stand on its own two feet and be competitive in an open market is not a sustainable industry! “””””
So wind and sun are different in what way ??
Maybe Sun energy is EM Radiation; no, I think it is thermally generated a la Planck. Nah, it’s nuclear energy. Well that takes Thermos, and gravity as well; I guess it’s gravity to begin with !
Now that wind; I guess it’s gravity as well !
Wind and sun energy come from the same gravitation (inside the sun)
RE: Rattlesnake Heaven
In the desert, shade is in short supply. In these large PV solar arrays, the panels shade the desert floor. It won’t too long before every in rattler the area will take up residence under the panels. There might be so many of them that it might become too dangerous for workers to enter area for routine maintenence like cleaning gritty dust off the panel covers.
“A sustainable industry is one that stands and competes on its own, not one that is dependent on the government teat.”
Seems like you would support getting rid of government subsidies to fossil fuels in the US, Anthony. Am I right?
[REPLY: You do know the difference between tax incentives and subsidies, right? -REP]
Tired old cliche from the green lobby. Fossil fuel subsidies. Ofcourse one can’t expect people with alpha studies to understand the complexities of taxation, but at least they could understand that a general tax writeoff is the same for any enterprise regardless. Refusing tax writeoffs for oil companies would be absurd. On what grounds? Oil products gets taxed to high heaven already and now you want to tax oilproducers more then other enterprises? That would be some party for fiscal lawyers. They’d sue the government blind and with good reason.
Yabbut — what they produce is junk; that doesn’t change. Wobbly unpredictable power is almost worse than no power. Fuggedaboudit.
Further to above: it is yet to be demonstrated that the real freemarket revenues of solar/wind farms are sufficient to pay for their upkeep. Let us not forget, either, the opportunity cost of degraded and blighted landscape, and transmission corridors, and stifled tourist trade.
The subsidy that is going to have to be paid eventually will be for scrapping the lot, and returning the land to usable condition. And the bill will be large.
A point not often considered is that many windturbines contain scarce materials like neodymium, therefore they would have to be recycled rather than just scrapped. The cost of doing so might be significant. Then, there is the issue of public liability for landowners. A derelict windfarm would be effectively the same as a ruined building in that precautions would have to be taken to protect the public from falling debris or other accidents. This might mean cordoning off the entire area until, at the very least, the blades are removed. Functionally this could result in large areas of hillside being denied to walkers.
http://uncyclopedia.wikia.com/wiki/Wind_generators – A few votes for highlight might get this on the frontpage.