SPAIN’S F-I-T FALL WREAKS WORLD SUN TROUBLE

Spain's Solar-Power Collapse Dims Subsidy Model
Angel Gonzalez and Keith Johnson, September 3, 2009 (Wall Street Journal)

"Spain's hopes of becoming a world leader in solar power have collapsed since the Spanish government slammed the brakes on generous subsidies…The sudden change has rippled across the global solar industry, in a warning of the problems that government-supported renewable-energy programs can encounter.

"In 2008, Spain accounted for half the world's new solar-power installations in terms of wattage, thanks to government subsidies to promote clean energy. But late last year, as the global economic crisis worsened, the government dramatically scaled back those subsidies and capped the amount of subsidized solar power that could be installed."

The feed-in tariff's impact was immediate and dramatic. (click to enlarge)

"Factories world-wide that had ramped up production of solar-power components found that demand for solar panels was plummeting, leaving a glut in supply and pushing prices down. Job cuts followed…

"Clean-energy skeptics, however, point to Spain as a cautionary tale of a government policy that created a speculative bubble with disastrous consequences…Some Republicans have cited Spain's solar bubble and bust as an example of how unsustainable government clean-energy pushes are…Two House Democrats, Jay Inslee of Washington and Bill Delahunt of Massachusetts, are drafting legislation that would create European-style tariffs for solar power…The industry's fundamental problem is that, without subsidies, it's still not economically viable."

The Spanish are starting to ask questions. (click to enlarge)

"Spain's solar ambitions started as an outgrowth of its earlier push to become a global player in wind power. By offering generous long-term support for wind power, Spain became a world leader…so the Spanish government sought to make solar power more attractive by increasing subsidies, just as other countries, particularly Germany, were scaling back support…Spain's solar capacity last year increased [5 times]

"Faced with the unraveling world economy and a deepening budget deficit, the Spanish government late last year reduced the money it paid for solar electricity and capped the amount of subsidized solar power installed each year at 500 megawatts. Spain's solar-power capacity has actually shrunk this year as a result…[and] effects have been felt far beyond Spain."