Solar Energy Lessons from Spain

Image World Nature by Danilo Rizzuti
www.freedigitalphotos.net

After reading the informative New York Times article, "Solar Industry Learns Lessons in Spanish Sun" by Elisabeth Rosenthal on March 8, 2010, it provides a story of how government incentives can run amok.

With well-meaning intent, the Spanish government subsidized solar generated electricity to 58 cents a kilowatt hour. This subsidy was the highest in the world in 2007 and caused a solar energy production boom. The coal producing area around Puertollano, Spain was a primary beneficiary with 20% unemployment dropping to below 10% with solar industry setting up shop there.

Energy production reached 400 megawatts by 2007 and 2500 megawatts in 2008. The energy output was great but for the fact that inefficient plants were being kept operating by Spanish government money. So now the government is adjusting the money paid to 39 cents per kilowatt for plant produced electricity and a different rate for rooftop panels.

This rate change caused solar panel manufacturing plants and production facilities to close. The article does not list what the 2009 solar electricity production values.

Lessons for the United States, be careful how subsidies are set and do allow the production/capacity to grow too fast.