"It doesn't matter how beautiful your theory is, it doesn't matter how smart you are. If it doesn't agree with experiment, it's wrong." Richard P. Feynman

Saturday, June 19, 2010

Spain Solar - From Poster Child to Bete Noir!

Spain is now paying the price of an idiotic rush to install billions of dollars worth of subsidised solar power plants without counting the economic cost. With the injection of financial reality caused by Greece's near-death experience Spain is trying to get it's books in order and reverse some of the foolish Green power decisions it has made.
Bloomberg reports Spain’s government will cut the revenue of most existing solar-power plants by 30 percent, a move that may bankrupt hundreds of companies that produce electricity using photovoltaic panels, a local trade group said.

The industry ministry, after negotiating with trade groups for weeks, plans to reduce the number of hours a day during which they may earn subsidized prices for clean energy, said Tomas Diaz, director of external relations at the Photovoltaic Industry Association in Madrid.
“It’s incomprehensible that the government is doing this,” Diaz said in a telephone interview after solar industry representatives met today with Deputy Industry Minister Pedro Marin. “We feel cheated.”
Solar executives, whose companies have invested more than 18 billion euros ($22 billion) in the last three years in Spain, have pressed the government for weeks to maintain prices guaranteed for 25 years under a 2007 law. The decision, which hasn’t been approved by the cabinet, would mean bankruptcy for most of Spain’s 600 photovoltaic operators, Diaz said.
A spokesman for the industry ministry who asked not to be identified by name declined to comment. The ministry has yet to make public its proposed reductions.
“The companies will challenge this in the courts,” Diaz said.
New Plants Targeted
Spain also plans reductions for solar-energy facilities yet to be built. Subsidized rates earned by new, ground-based photovoltaic generators will be reduced by 45 percent, Diaz said. Panels mounted on large roofs will see a 25 percent reduction, while those on small roofs will be cut by 5 percent, he said. Diaz did not comment on rates for solar-thermal plants, a rival technology for producing power from the sun.
“This is ridiculous,” said Pedro Michelena, a partner at Qualitas Equity Partners, which owns a third of Fotowatio Renewable Futures alongside GE Capital. “I can’t believe that this is the final proposal.”
“We have to hope that common sense wins out in the end,” said Michelena. “I feel it’s still up in the air.”

The failure of the Spanish solar experiment is an object lesson to misguided politicians seeking to gain green credentials by subsidising un-economic green power , with such subsidies to be paid by taxpayers long into the future . In the end the piper must be paid and these lawmakers will be seen for the fools they are.

3 comments:

  1. The years of court cases and eventual compensation payments for breach of contract will cost more than the green power did.

    Sad, but a very necessary lesson of what happens when ignorant zealots hijack engineering decisions. We need to carefully document these events for future generations to study.

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  2. I have forwarded the following email to Tony Abbott. I hope he acts on it!

    Dear Tony,

    Please take the time to read the article accessed via the following email. Just click on the ‘Climate Common Sense’ link. You can also access the original Bloomberg site from there.

    As we all know, this will be a crucial issue at the upcoming election yet no one in politics is stating the most obvious of facts. It is not possible to have reliable, continuous supply of power with solar or wind alone. No matter how many solar or wind systems are installed, there will always be a need to have conventionally powered stations on line capable of meeting the entire load.

    There is no saving in capital cost at all. In fact the capital cost is well nigh doubled, no matter who pays for it, because two systems are needed instead of one.

    When it comes to so called green power, very few people are paying the full cost of their own systems so we have the up front government subsidy to cover a major proportion of the capital cost, plus the ongoing subsidies people expect to receive from either the government or power utility to provide them with some sort of payback on their proportion of the original up front investment. Without both of these subsidies, very few people would be prepared to purchase solar systems.

    Who pays?

    Well that’s the joke. We all do. If the government funds these schemes, we all pay for them through our tax base. If the utilities fund them, they have to put up their rates to cover the cost because at the end of the day, they still need the same amount of revenue because they have the same operating costs and overheads to cover so someone has to pay for these.

    Just imagine what would happen if overnight, half of the households and businesses in Australia decided they were going to install a solar system. The power stations would lose a huge proportion of their revenue, but they would still have to maintain the capability to keep on cranking out exactly the same amount of power they do now so that when the sun doesn’t shine, households and businesses will still have power. So who is going to make up for this loss of revenue? We all will…there is no net saving…it is all smoke and mirrors and just a joke because the power generation and distribution industry must be funded one way or another. It cannot be downsized, because it must be capable of meeting peak load on demand and that’s not an easy thing to do.

    If you need more information, just contact the man who operates the following site. You will see from his profile that he is a retired engineer who worked in the power industry for many years as a specialist in this area and he really knows his stuff. He is also an ex University Lecturer.

    As a political strategy, you won’t even have to go out on a limb to put this proposition forward. Just highlight the plight of Spain (read the article) and the UK to make the point and inform people about what is happening out there in the real world. Both have expended billions in this area only to see it fail, so it is morally and ethically wrong to stand back and do nothing now we know what is happening in Spain. With this information before us, it would be nothing short of criminal to permit home owners and business people to continue to invest in wind and solar generating facilities, only to see their investment go down the drain.

    In short, the brutal reality is this. We all love our planet and we all want to do the right thing by it…it is the only one we have…but unless and until someone comes up with some better answers; the green power revolution is doomed to failure because it is not economically sustainable and remaining in a state of denial will not fix a darn thing.

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  3. I followed up my earlier email to Tony Abbott with this one Baron which relates to another of your postings re wind power generation in the UK and the fact that are now paying the wind generation companies not to produce power because they don't know what to do with it...

    Dear Tony,

    As I said in my previous email, the UK is having its problems as well (as Spain) and here is the proof. (This references your posting on wind power generation in the UK)

    The continued funding of wind power and solar via subsidies and preferential tariffs is clearly unsustainable and the huge mass of mounting evidence to prove it can no longer be ignored.

    Please take a stance and prevent Australia from going down this road that leads to nowhere but bankruptcy and a lunatic asylum.

    With our current debt levels we simply cannot afford this kind of stupidity. Because of the sane actions you and the other members of our previous government took to put our economy on a solid footing, we were able to survive the GFC and became internationally renowned for our ability to manage our economy. If we take steps to do something positive about this kind of misdirection now, we will once again be seen as the one shining beacon of rational thinking, common sense and hope amid the sea of reckless spending and error ridden decisions being created by other members of the international community. They have rushed blindly ahead under tremendous pressure from the green lobby and those with vested interests in alternative power ventures who have used false theories to support their calls to action and others are now being made to pay.

    This is so unfair Tony and following others lemming like over a cliff into this sea of bad decisions is clearly not the way to go; especially when we have the opportunity to learn from their mistakes and avoid a similar catastrophe.

    Please act Tony… the time is now!

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