NewEnergyNews: SPANISH ADJUST INCENTIVES TO NEW REALITY

NewEnergyNews

Gleanings from the web and the world, condensed for convenience, illustrated for enlightenment, arranged for impact...

The new challenge: To make every day Earth Day.

YESTERDAY

  • ORIGINAL REPORTING: A UTILITY IN THE MAKING: THE MUNICIPALIZATION OF BOULDER, COLORADO
  • ORIGINAL REPORTING: WHAT HAPPENED TO THAT NATIONAL HIGH VOLTAGE TRANSMISSION SYSTEM?
  • THE DAY BEFORE

  • ORIGINAL REPORTING: THE STATE OF THE U.S. WIND INDUSTRY (AND WHAT IT MEANS FOR UTILITIES)
  • ORIGINAL REPORTING: HOW SACRAMENTO'S PUBLIC UTILITY IS GETTING IN THE RESIDENTIAL SOLAR BUSINESS
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    GET THE DAILY HEADLINES EMAIL: CLICK HERE TO SUBMIT YOUR EMAIL ADDRESS OR SEND YOUR EMAIL ADDRESS TO: herman@NewEnergyNews.net

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    THE DAY BEFORE THE DAY BEFORE

  • ORIGINAL REPORTING: HAS APS INVENTED A ROOFTOP SOLAR BUSINESS MODEL FOR UTILITIES?
  • ORIGINAL REPORTING: THE GRID NEEDS INDEPENDENT DISTRIBUTION SYSTEM OPERATORS
  • THE DAY BEFORE THAT

  • ORIGINAL REPORTING: HOW SHOULD UTILITIES VALUE SOLAR?
  • ORIGINAL REPORTING: IS PUERTO RICO THE NEW POSTER CHILD FOR THE UTILITY DEATH SPIRAL?
  • AND THE DAY BEFORE THAT

  • Weekend Video: Reindeer Stresses
  • Weekend Video: Pink Fracking
  • Weekend Video: Fighting Duke For Solar
  • THE LAST DAY UP HERE

  • ORIGINAL REPORTING: ARE NATURAL GAS AND RENEWABLES THE FUTURE OF TEXAS' POWER GRID?
  • ORIGINAL REPORTING: COULD FERC PUT A PRICE ON CARBON?
  • --------------------------

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    Anne B. Butterfield of Daily Camera and Huffington Post, is an occasional contributor to NewEnergyNews

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    Some of Anne's contributions:

  • Another Tipping Point: US Coal Supply Decline So Real Even West Virginia Concurs (REPORT), November 26, 2013
  • SOLAR FOR ME BUT NOT FOR THEE ~ Xcel's Push to Undermine Rooftop Solar, September 20, 2013
  • NEW BILLS AND NEW BIRDS in Colorado's recent session, May 20, 2013
  • Lies, damned lies and politicians (October 8, 2012)
  • Colorado's Elegant Solution to Fracking (April 23, 2012)
  • Shale Gas: From Geologic Bubble to Economic Bubble (March 15, 2012)
  • Taken for granted no more (February 5, 2012)
  • The Republican clown car circus (January 6, 2012)
  • Twenty-Somethings of Colorado With Skin in the Game (November 22, 2011)
  • Occupy, Xcel, and the Mother of All Cliffs (October 31, 2011)
  • Boulder Can Own Its Power With Distributed Generation (June 7, 2011)
  • The Plunging Cost of Renewables and Boulder's Energy Future (April 19, 2011)
  • Paddling Down the River Denial (January 12, 2011)
  • The Fox (News) That Jumped the Shark (December 16, 2010)
  • Click here for an archive of Butterfield columns

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    Some details about NewEnergyNews and the man behind the curtain: Herman K. Trabish, Agua Dulce, CA., Doctor with my hands, Writer with my head, Student of New Energy and Human Experience with my heart

    email: herman@NewEnergyNews.net

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    Your intrepid reporter

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      A tip of the NewEnergyNews cap to Phillip Garcia for crucial assistance in the design implementation of this site. Thanks, Phillip.

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    Pay a visit to the HARRY BOYKOFF page at Basketball Reference, sponsored by NewEnergyNews and Oil In Their Blood.

  • ---------------
  • Sunday, August 03, 2008

    SPANISH ADJUST INCENTIVES TO NEW REALITY

    The hottest topic in the solar energy world is the “feed-in tariff” (FiT). The U.S. solar energy world is debating whether there should be a FiT. Germany and Spain, among the leading solar energy producing countries in the world, have built thriving solar energy industries on FiTs and are more concerned with determining what the best FiT should be.

    Net metering, a common allowance in many U.S. states, grants individual installers of energy systems the privilege of selling the electricity their systems produce to their utilities at predetermined or prevailing rates until they zero out their power bills.

    A feed-in tariff is a set per kilowatt-hour (kW-h) price paid for electricity system owners’ use and for the electricity they feed into the grid beyond their own consumption. It essentially makes system owners independent power producers. Typically, FiTs are paid at higher than retail “per kW-h” rates over extended periods, usually 20 years, to incentivize solar system installation.

    Backstory: There was a time not so long ago when solar panels cost so much they weren’t used much except by hobbyists, geeks and off-grid outlaws. Everyone knew solar energy was the way of the future but there didn’t seem to be any way to get to the future.

    If only there was demand in larger volumes, solar advocates mulled, production would soar and economies of scale would drive costs down.

    A dynamic visionary named
    Hermann Scheer convinced the German government to provide incentives for solar energy in 1990, including a FiT, and the German solar industry began growing at 30% every year.

    The Japanese created the world’s next incentive program in 1994 and it jettisoned them to temporary world leadership in solar energy use.

    Germany increased its incentive programs in 2000 and soon became the new world leader.

    Spain has more recently instituted its own FiT. The same impressive production increase followed.

    In the U.S., individual states instituted Renewable Electricity Standards (RESs) requiring their utilities to obtain a defined portion of their electricity from New Energy sources by a date certain, some with “solar carve-outs” requiring a specific portion of that New Energy to be solar energy. California introduced a limited FiT in 2008. It has produced unlimited debate.

    The dreamed of economies of scale became a reality. The solar energy industry boomed. Prices for solar energy-generated electricity fell and continue to fall toward parity with the price of electricity generated by traditional sources.

    More recently, however, doubts have arisen about the FiT because of the very economies of scale the incentives’ creators had sought. With larger scale, the costs of the subsidies threaten to become burdensome.

    An FiT rewards a solar system’s installer at the expense of either the utilities or the government. If the higher than retail per kW-h rate is paid by the utility to the solar system owner, the utility’s other ratepayers bear the burden. If the government pays, taxpayers share the burden. Eventually, this makes conservative elements on the ratepayer/taxpayer side restive.

    In response to critics’ calls for a downward pressure on the subsidies to stimulate more immediate engagement, a degression rate (a gradual lowering) often is built into a FiT. Different countries are trying different FiT rate/degression rate combinations.

    The goal is to positively affect the market, incentivizing growth at a sustainable level. If a FiT is high but degresses too quickly, it might create too much market activity too quickly. A FiT that is not high enough might fail to generate satisfactory market activity whether it is long-term or degresses quickly. A long-term, high FiT could move too much market share away from the solar industries in other countries.

    Examples of specific, currently effective FiTs include those in Germany and Italy. The progress of FiTs in mature solar energy markets seems to be toward lower per kW-h rates and an increasing degression rate, as seen in the newer German rate structure.

    Have flaws in the FiT caused market vicissitudes?

    First Solar, the fastest growing thin-film solar materials company in the world, said July 30 it is pursuing opportunities in Italy and France but not pursuing the legendary market in Germany or the booming market in Spain. Why?

    Pressure from non-solar energy producing German ratepayers over the high costs of electricity resulting from utility FiT subsidies has forced that nation to cut its FiT rates. The world-leading market there is expected to fall off.

    Spain’s very high FiT, designed to stimulate market growth over 4 years, was over-subscribed in its first year. The resultant booming solar market is considered inflated. The government’s energy ministry has spent months debating a new FiT, leaving the industry and its marketplace in limbo. With the announcement of a new plan, foreign solar companies are rushing into Spain’s marketplace to take advantage of the short-term subsidy but are expected to leave behind market chaos when the FiT rate drops later this year.
    (See GE buys 32 pct of Spanish solar energy firm)

    What is a perfect FiT? There is no certain answer. The goal is still to push economies of scale in the solar industry by achieving the highest level of sustainable market growth. On the other hand, as one country changes or scales back its FiT to make its market more sustainable, another often ups its FiT to stimulate action. The result: Action. Like other businesses, solar businesses go where the return on investment is easiest.

    See also PACT: Policy Action on Climate Toolkit

    And check out the film version of Hermann Scheer’s newest book, Energy Autonomy – The Code of Survival

    (NewEnergyNews must thank solar energy insider Alexandra Kravetz for the expansive industry information she so generously offered in the preparation of this post. Though NewEnergyNews takes full responsibility for all editorial opinions and decisions, Ms. Kravetz' expertise was invaluable background.)

    Click thru to PACT and design a FiT. (click to enlarge)

    Spanish Energy Commission Votes to Shrink Solar Incentives
    Ucilia Wang, July 30, 2008 (GreenTechMedia)

    WHO
    Spanish Administrative Council of the Commission de la Energia (CNE)

    WHAT
    Spain’s first FiT was designed to provide incentives for 4 years. It was used up in its first year. CNE has redesigned the FiT with new limits on total megawatts allowed, new electricity rates and a 1-year limit. It was submitted it to the Spanish parliament and prime minister for approval. The rush to capitalize on the present FiT could generate the installation of 1.2 gigawatts of new solar, a subsidy-induced market expansion that could disrupt the world solar industry.

    click to enlarge

    WHEN
    - CNE set new FiT rules July 29.
    - The new FiT limits the program to the first 300 megawatts of new installation in 2009.
    - The previous FiT limited the program to a total of 400 megawatts between 2007 and 2010 but the entire 400 megawatts was built in 2007.
    - The proposed CNE rule also sets new FiT electricity rates to take effect in September 2008.

    WHERE
    - The Spanish FiT led to a “rush” of solar energy development. Even solar companies from other European countries, from the U.S. and from Asia have profited from Spain’s taxpayer-subsidized boom.
    - Because Spain is lowering its allowance, business is expected to migrate to Germany where the FiT is still predictable.

    click to enlarge

    WHY
    - In the months since the FiT allowance of megawatts was used up, the Spanish solar energy industry has been in upheaval.
    - The new FiT proposed by the CNE may over the long term sustain the nation’s solar industry but in the short term may bring profit-takers rushing back into the market to take advantage of one-year provisions.
    - The new FiT limits new installations to 300 total megawatts, 250 of ground systems and 50 megawatts of rooftop systems. The level of ground systems allows stimulus to solar power plant development.
    - New electricity rates: 29 to 31 euro cents/kilowatt-hour, depending on the location fo the system (from 45 euro cents/kilowatt-hour).

    QUOTES
    - Nick Allen, research analyst, Morgan Stanley: “Long-term, 300 megawatts for 2009 signals a rapid deceleration in the Spanish market…The likely target repository for 2009 module production is now clearly the uncapped market of Germany.”

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