Over at Bishop Hill, there’s a story about an inquisition into the Spanish solar power industry, which was so heavily subsidized and the price being paid for solar power feed-in so much more than conventional power, that some unscrupulous opportunists decided to run solar power systems at night, with the help of a diesel generator:
After press reports, it was established during inspections that several solar power plants were generating current and feeding it into the net at night. To simulate a larger installation capacity, the operators connected diesel generators.
“This is just the tip of the iceberg,” said one industry expert to the newspaper “El Mundo”, which brought the scandal to light. If solar systems apparently produce current in the dark, will be noticed sooner or later. However, if electricity generators were connected during daytime, the swindle would hardly be noticed.
Now, the results of the inquisition are published, and it’s just what you’d expect:
The chapter analysing the history of the industry in Spain is laugh-a-minute stuff, a tale of incompetent politicians and civil servants bumbling from one disaster to another and fraudulent investors cheating their way to a slice of public funds. We learn how the Spanish government decreed a feed-in-tariff system that guaranteed six times market rates to PV businesses, before a belated realisation that this was going to lead to astonishing surges of investment. They then put in place a series of only partially successful measures in an attempt to stop the expansion, as the whole farrago quickly became unaffordable and ultimately disastrous. We hear about the diesel generators generating “solar power” at night and that at one point the authorities estimated that half of new solar PV connections to the grid were fraudulent.
Bishop Hill has more here, including a comparison of the dismal EROI number.
The preview for the book suggests the authors did a detailed job on the inquisition, which has been out for over a year:
The Energy Return on Energy Invested (EROI or EROEI) is the amount of energy acquired from a particular energy source divided by the energy expended, or invested, in obtaining that energy. EROI is an essential and seemingly simple measure of the usable energy or “energy profit” from the exploitation of an energy source, but it is not so easy to determine all of the energy expenditures that should be included in the calculation. Because EROI values are generally low for renewable energy sources, differences in these estimates can lead to sharply divergent conclusions about the viability of these energy technologies. This book presents the first complete energy analysis of a large-scale, real-world deployment of photovoltaic (PV) collection systems representing 3.5 GW of installed, grid-connected solar plants in Spain. The analysis includes all of the factors that limit and adjust the real electricity output through one full-year cycle, and all of the fossil fuel inputs required to achieve these results. The authors’ comprehensive analysis of energy inputs, which assigns energy cost estimates to all financial expenditures, yields EROI values that are less than half of those claimed by other investigators and by the solar industry. Sensitivity analysis is used to test various assumptions in deriving these EROI estimates. The results imply that the EROI of current, large-scale PV systems may be too low to seamlessly support an energy and economic transition away from fossil fuels. Given the pervasiveness of fossil fuel subsidies in the modern economy, a key conclusion is that all components of the system that brings solar power to the consumer, from manufacturing to product maintenance and life cycle, must be improved in terms of energy efficiency. The materials science of solar conversion efficiency is only one such component.
Sunny Spain represented an ideal case study as the country had the highest penetration of solar PV energy at 2.3 percent of total national demand as well as state-of-the-art expertise in solar power including grid management of intermittent, modern renewable systems. This book, written by a uniquely qualified author team consisting of the chief engineer for several major photovoltaic projects in Spain and the world’s leading expert on the concept and application of EROI, provides a comprehensive understanding of the net energy available to society from energy sources in general and from functioning PV installations under real-world conditions in particular. The authors provide critical insight into the capacity of renewable energy sources to fill the foreseeable gap between world energy demand and depletion rates for fossil fuels.
· Presents the first comprehensive study of the EROI of large-scale solar PV systems in a developed country
· Uses real-world operational data rather than laboratory approximations and extrapolations
· Describes the dependence of one alternative energy source on the goods and services of a fossil-fueled economy
· Has global implications for the potential of renewable energy sources to replace dwindling reserves of fossil fuels
· Written with the first-hand knowledge of the chief, on-site engineer for many solar installations in Spain together with the leader in the development and application of the concept of EROI
And finally, for those that don’t get the joke in the headline, see this.
During the period of the French in Indochina it is reported that rats became paramount, not in size but in numbers. The French decided to pay for every dead rat. The result wasn’t a reduction of the rat population, but in the Vietnamese breeding rats. Nothing is foolproof. The fools are much too creative…
One of the few true axioms in economics:
“If you want more of something, subsidize it; if you want less of something, tax it.”
This story has been rumbling around since April 2010.
http://motls.blogspot.co.uk/2010/04/spain-produces-solar-energy-at-night.html
REPLY: yes, see the link at top to the WUWT story from that time, perhaps you missed it? – Anthony
“The size of the subsidies paid annually, which amounted to about $68 billion between 1998 and 2013, had increased by 800% between 2005 and 2013.” [My bold]
http://www.forbes.com/sites/williampentland/2014/02/19/stampede-of-investors-sue-spain-over-cuts-in-solar-subsidies/
In Moscow during the days of the Soviet Union taxis were paid, not to satisfy passengers wanting to go from A to B, but by the kilometer.
So the cabbies would park in an ally, jack up the back end, put a weight on the accelerator, and go to the pub or wherever.
Plus ca change, Dude!
One of the few true axioms in economics:
“If you want more of something, subsidize it; if you want less of something, tax it.”
Unless there are write offs for re-investment which then encourages more baseline growth. However in the U.S. the philosophy is instead to reduce the tax base when possible and also allow “tax escape” to other nations. In addition, human nature being what it is, profits will win out over shortcuts, be they unethical or immoral. Corporate structures are treated like individuals, however their human rulers don’t necessarily care as long as they have got theirs (re 2008 meltdown). An obvious attempt at reducing this deficiency and adding a layer of protection is oversight regulation, but we no longer want those either. How inexpensive the cost of living would be if all were honest.
Since the entire universe is made out of energy, we will never run out. Rather, the more people there are, the more Einsteins we will have to find ways of converting formerly useless things to useful energy and resources.
It is all very well to point out the economic idiocy of wind and solar. But what really matters to me is the effect on the life of the world, human and other. We are carbon-based life forms. Fossil fuels and only fossils increase the weight of the biosphere.
It’s only a matter of time before something comparable befalls the wind industry.
Perhaps the true cost of those excess payments for non-production of energy during windy spells (!) – or maybe turbines useful lifespans will be revealed as being way less than originally claimed, thus sky-rocketing real costs.
Either way, there’s an air of inevitability about it.
Reminds me of a story I read recently about bounties paid out to people years ago who turned in the hides of noxious creatures, like rats, poisonous snakes, etc. Eventually people realized that it was worth their while to raise rats on their own (in secret of course) and turn them in for the bounty, as the amount collected from the authorities exceeded the cost of raising these creatures. This had the double effect of draining the treasury while the number of rats increased. The more things change…
“Given the pervasiveness of fossil fuel subsidies in the modern economy”
BS
There are very few fossil fuel subsidies in western economies. There are massive consumption subsides in OPEC nations so that local populations get cheap gasoline so they don’t overthrow the government.
sunshinehours1 says:
August 17, 2014 at 7:16 am
.
“There are very few fossil fuel subsidies ”
..
http://www.misi-net.com/publications/NEI-1011.pdf
Edward Richardson:
re your post at August 17, 2014 at 7:27 am.
Support for R&D is not a subsidy.
Richard
richardscourtney says:
August 17, 2014 at 7:33 am
Re your post.
..
Yes it is
Anthony
I’m surprised, given their understanding of energy efficiency that Greens haven’t seized on the obvious extension of the solar night scam to solve periodic lack of wind…
Reverse the process, i.e. use nuclear power to drive the turbines and create the missing wind 🙂
Renewable energy seems to me to be several hundred percent better that standing in a shopping bag while trying to pick yourself up by the handles
How inexpensive the cost of living would be if all were honest.
============
honesty is its own reward. most people prefer cash.
Edward Richardson:
You do realize that the lion’s share of those “subsidies” fall under plain old tax deductions, identical or equivalent to every other business out there? They toss those in because without counting those normal, everyday tax code items, the “subsidies” for fossil fuel mostly disappear.
That paper is especially hilarious because they count the costs of regulation: in other words, they include the price of the Federal employees who watch over the oil industry! They’re not even just counting the costs of the people who actually do the watching: they include the entire budget of the Department of Energy and others.
This part is good: “Federal regulation costs for renewable energy were negligible.” Yeah, because they paid for those “costs” by rolling the expenses into the Department of Energy – and billing it to the fossil fuel industry.
Edward, the great lie of green companies is to claim tax deductions for oil companies are subsidies … when in fact those same tax deductions are available to many other businesess.
Second … US citizens pay an anti-subsidy in terms of the Federal Excise Tax on gasoline.
The NET subsidy in the USA (even using the lies told by your source) is about NEGATIVE 20 billion.
Your source:
“Tax policy includes special exemptions, allowances, deductions, credits, etc., related to the federal tax code. Tax policy has been, by far, the most widely used form of incentive mechanism, accounting for $394 billion (47 percent) of all federal expenditures since 1950. The oil and gas industries for example, receive percentage depletion and intangible drilling provisions as an incentive for exploration and development. Federal tax credits and deductions also have been utilized to encourage the use of renewable energy.”
My comment: 6.5 billion a year in tax deductions is not a subsidy. It isn’t even very much money.
Comment 2: “The federal gasoline tax raised $25 billion on gasoline in 2006.”
So the amount of NEGATIVE subsidy is 4x the rate of your sources claimed subsidy.
Reality:
“A tax deduction and a government subsidy aren’t the same. When politicians use the terms interchangeably, it misleads many Americans.
Oil-company tax deductions aren’t special favors. They are the standard relief afforded manufacturers, mining companies and other businesses to help recognize the costs of operations. Oil companies can deduct their expenses for things like equipment purchases and rig-technicians’ salaries. The point of these deductions — as for any other industry or individual — is to ensure taxes are only levied on income after expenses.
Oil companies can also deduct expenses related to exploration or development. The idea there is to provide an incentive to take on the often substantial risk of seeking new energy sources. When these efforts succeed, the energy market expands, prices drop and America moves that much closer to energy independence.”
http://nypost.com/2012/04/16/the-prezs-oil-tax-break-lies/
Total tax at the pump on a gallon of gasoline in California is approximately 85-cents, highest in the nation. A 15-cent per gallon California “carbon tax” is set to be added soon, bringing the total tax per gallon, at the pump, to $1.00. Where do I apply to get this “fossil fuel subsidy” I keep hearing about?
Hmmm. So how many windelec farms (turbine farms) are producing electricity when the wind is calm?? This also reminds me of two reverse scams.
A pleasure park fitted windelecs, to show how green they were, but they were more often than not powered by electricity (not generating electricity), just to look good.
And in one of the funniest environmentalist errors of all time, the BBC sent its outside broadcast unit to make the first ever wind-powered outside broadcast (the BBC truck was linked up to a huge windelec). Only one problem – no wind. So the presenter, I kid you not, opened the show by saying something like: “This is a momentous moment, the first outside broadcast powered by the wind. We are actually using diesel generators at present, but this broadcast demonstrates the power of wind turbine technology”.
Only the BBC, only the BBC…….
If anyone has this BBC clip on tape, please let me know.
Ralph
sunshinehours1 says:
August 17, 2014 at 8:00 am
“Oil-company tax deductions aren’t special favors. They are the standard relief afforded manufacturers, mining companies and other businesses to help recognize the costs of operations. ”
…
So, how does a small manufacturer of windows get an oil depletion allowance?
Edward Richardson:
Your argument by assertion at August 17, 2014 at 7:35 am is information-free.
Support for R&D is not a subsidy. It may be considered to be a government investment, but it is not a distortion of a market by industry support.
I refer you to the discussion of various forms of subsidy discussed by the World Trade Organisation (WTO) in this paper.
Purchase of R&D is a contract for business when conducted at commercial rates: it is not a subsidy.
The paper you linked reports government contracts for R&D at commercial rates.
I refer you to this paragraph in the WTO paper which refers to “money transfers from the government to the recipient”. Clearly, the R&D support which you cite is NOT subsidies.
Richard
Edward Richardson says:
August 17, 2014 at 7:27 am
Re your post.
Thanks for the link to the report. But it hardly demonstrates your case.
For instance, when examining the claimed $125 bn in “regulation” subsidies, and looking at the examples cited on page 8 of the report we find three:
1. exemption from price controls (during their existence) of oil produced from “stripper wells”
So, the government put price controls on oil, but realized that would make production from stripper wells uneconomic, and decided it was more prudent to not shut down a source of production with an idiotic law. Some “subsidy.”
2. the two‐tier price control system, which was enacted as an incentive for the production of “new”
oil
See comment to 1) above. Same conclusion.
3. the higher‐than‐average rate of return allowed on oil pipelines.
Here, the government regulated the allowed profit on pipelines, treating them like utilities. In other words, they suppressed the profits that would have otherwise occurred. To the extent that they didn’t suppress the profits on particular oil pipelines, these get counted as subsidies. Again, some “subsidy.” It would make much more sense to calculate the cost to the oil industry of each of the above three “subsidies” since each example cut into what otherwise would have been higher oil industry profits that politicians denied the industry overtly.
It must be frustrating to be managing in an industry, see the government try to damn near regulate you out of existence from time to time, finally succeed in getting the politicians to allow you to make a market-determined profit once again, and then find that all the previous exceptions to former regulations (i.e., former losses in profits) to then get counted as subsidies that you supposedly benefited from, no?
This sort of nonsense “subsidy” accounted for $125 bn of the $369 bn total for the oil industry. Another $194 bn was attributed to tax policy, for which similar arguments could be made. In fact, the oil industry has had to fight tooth and nail to expand in the U.S., as has nuclear and gas, but none of those regulatory penalties (reverse subsidies?) make it into the calculation. (Well, actually they do, as I pointed out above, but perversely, as subsidies for not being penalized in specific cases.)
Meanwhile, we pour true subsidies (actual taxpayer cash, directly paid to the intended recipient) for both the producers and consumers of various forms of green energy and its associated products.
Edward: “So, how does a small manufacturer of windows get an oil depletion allowance?”
Do window manufacturers get to write off the loss of value of their stock of windows if it is no longer saleable? Yes.
Do window consumers pay a massive Federal Excise Tax on Windows? No.
The NET :subsidy” is in fact negative after taking into account the consumption penalty imposed by the federal government on gasoline.
Depletion write-offs aren’t just for fossil fuels.
“Depletion is an accounting concept used most often in mining, timber, petroleum, or other similar industries. The depletion deduction allows an owner or operator to account for the reduction of a product’s reserves. Depletion is similar to depreciation in that, it is a cost recovery system for accounting and tax reporting. For tax purposes, there are two types of depletion; cost depletion and percentage depletion.
For mineral property, you generally must use the method that gives you the larger deduction. For standing timber, you must use cost depletion.[1]
According to the IRS Newswire,[2] over 50 percent of oil and gas extraction businesses use cost depletion to figure their depletion deduction. Mineral property includes oil and gas wells, mines, and other natural deposits (including geothermal deposits). ”
“A depletion allowance is analogous to depreciation and is appropriate when the quantity of the potential resource is unknown, such as the amount of recoverable oil from a well. Independent oil and gas producers use a depletion allowance to recover capital investments over time. This is also available to producers involved in mining, timber, geothermal steam, and other natural deposits. “
few fossil fuel subsidies
==============
Tax reduction is not a subsidy. If someone is hitting you over the head with a hammer, and they reduce the rate at which they are hitting you, have they done you a favor?
The problem with renewables is Feed In Tariffs (FITs), where renewables are guaranteed a price regardless of supply and demand. This distorts the energy market for all producers.
Power isn’t something you can turn on and off like a light switch. It is more like a huge flowing river, with the potential to do great damage if there is too little or too much water. As with many things, we use a market mechanism to regulate the flow of power.
When supply is low, the wholesale price of electricity is high. When there is too much power available, the wholesale price is low. If supply is high enough, the wholesale price even goes negative. You get paid to take power, and penalized if you produce it. Otherwise the grid would brownout or burnout.
However, solar and wind installations with guaranteed FITs are immune to this. When there is too much power for the grid, they will keep on producing anyways because they still get paid. On cloudy, windless days they cannot produce, no matter how high the price.
This has the effect of destabilizing the grid, which is ultimately not sustainable, except at great cost to the consumer. And ultimately, any great cost to the consumer is unsustainable. Sooner or later heads will roll.
So the ultimate irony is that in trying to build a sustainable electrical grid via renewables, the politicians have produce an unsustainable electrical grid.
Re: ferdberple says:
August 17, 2014 at 8:28 am
Very well said.