Planta termosolar Andasol: Image via Wikipedia
In Spain the huge subsidies (with feed in tariffs as much as ten times the average cost of electricity production) had led to a rush of developers getting into projects which is now proving unsustainable. Bloomberg reports that
Solar investors were lured by a 2007 law passed by the government of Prime Minister Jose Luis Rodriguez Zapatero that guaranteed producers a so-called solar tariff of as much as 44 cents per kilowatt-hour for their electricity for 25 years — more than 10 times the 2007 average wholesale price of about 4 cents per kilowatt-hour paid to mainstream energy suppliers. Now more than 50,000 other Spanish solar entrepreneurs face financial disaster as the policy makers contemplate cutting the price guarantees that attracted their investment in the first place.
Spain stands as a lesson to other aspiring green-energy nations, including China and the U.S., by showing how difficult it is to build an alternative energy industry even with billions of euros in subsidies, says Ramon de la Sota, a private investor in Spanish photovoltaic panels and a former General Electric Co. executive. “The government totally overshot with the tariff,” de la Sota says. “Now they have a huge bill to pay — but where’s the technology, where’s the know-how, where’s the value?”
The situation in Germany is equally disturbing. The New Scientist reports
Solar power is intermittent and can arrive in huge surges when the sun comes out. These most often happen near midday rather than when demand for power is high, such as in the evenings. A small surge can be accommodated by switching off conventional power station generators, to keep the overall supply to the grid the same. But if the solar power input is too large it will exceed demand even with all the generators switched off. Stephan Köhler, head of Germany’s energy agency, DENA, warned in an interview with the Berliner Zeitung on 17 October that at current rates of installation, solar capacity will soon reach those levels, and could trigger blackouts.
Subsidies have encouraged German citizens and businesses to install solar panels and sell surplus electricity to the grid at a premium. Uptake has been so rapid that solar capacity could reach 30 gigawatts, equal to the country’s weekend power consumption, by the end of next year. “We need to cap installation of new panels,” a spokesperson for DENA told New Scientist.
The experience with highly subsidised feed-in tariffs is proving to be less than successful. In country after country the use of such subsidies is proving to be a major distortion, unhealthy and unsustainable. Countries such as India which are contemplating the use of similar subsidies for promoting intermittent, wind or solar power are beginning to have second thoughts and are now having to consider caps. It is beginning to sink in that such intermittent capacity cannot be counted into the generating base and does not reduce the need for alternative, backup generating capacity. Moreover the use of intermittent power from solar and wind only ensures that the operating conditions for the alternative capacity and for the grid are fundamentally more inefficient. This in turn leads to a hidden cost as a consequence of using the solar or wind power.
It is likely that these subsidies will have to be scaled down drastically.
Tags: Electricity generation, Germany, Renewable energy, Solar power, Spain, subsidies
The k2p blog 
October 31, 2010 at 8:03 am
[…] power subsidies go wrong even in Australia By ktwop The evidence that subsidies are inherently unhealthy and can be counter-productive continues to grow […]