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I'm rather uncomfortable with this account.

  1. The first question to ask is, is the minister of industry an impartial observer?

  2. In particular, why are a 'myriad tiny facilities' a problem, and how do they make the management of the network difficult? This is not substantiated, and it seems the minister is channelling the growls of energy majors.

  3. The Spanish solar bubble of too generous rates has been punctured already, with the rate cut for 2009. If you look closely at the bar graph, you see that solar's big income jump is from 2008 to 2009, which reflects the even bigger jump in new installations in 2008. Thus, solar's current share of the Spanish FIT payout totals is a legacy issue, not an on-going bubble.

  4. There's more to the legacy issue point. In Spain's FIT system, a rate reduction would not affect new installations only, but existing ones too. So, while you think this is about stopping a bubble, the main direct effect would be that existing installations are made unprofitable. And the main indirect effect would be that investors into other FIT-supported generation modes could turn insecure, too.

  5. It's nice to put share of electricity produced and share of FIT support side-by-side, but does it make any sense? Given that there are higher FIT rates for technologies that are currently (and in the recent past) more expensive, it stands to reason that they would get more in total if FIT-supported sub-markets are to grow to the same scale...

  6. In an as yet more limited extent, but with a much better regularity (daily cycles), Jérôme's point about the merit order effect of wind power on electricity prices works for solar, too.

  7. In closing, I note I remember the time when, in Germany, wind, too, was attacked for (a) taking too much FIT money relative to other generating modes, (b) having too generous rates (with focus on small-scale inland projects), (c) making grid operation difficult, (d) making electricity expensive. (This was about five years ago, and the effect was rule changes halving the wind market and boosting the PV, solar-thermal and biofuels sectors.)


*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Sat May 1st, 2010 at 03:51:01 AM EST
I don't know enough about the guy to give an honest answer to that.  He was trained as an economist at the University of Minnesota.  No obvious bias at first glance.

I don't buy the grid argument, but I do think that there's a very simple recognition here that PV is the problem.  It's never going to develop into commercial level installations, and that's the point of these FITs.  The Spanish government recognizes that done right FITs can be used to help develop local industries.  There is already a wind energy cluster in Spain.  There's a developing thermo-solar cluster, and and even newer one for wave energy.  These all tie into established manufacturing bases in the north of Spain.

Wind drew upon the massive machine tool industry in the Basque Country.  Thermo-solar connects into companies making mirrors for autos.  And wave energy will employ the shipbuilding capacity in the region.  This is as much about building Spanish industry as it is about an energy policy.

That said, the current FIT in Spain come from 2 sources.  Royal Decree 1578/2008 specifies rates for the PV sector, and Royal Decree 661/2007 covers rates for the rest of the renewables sector.  I'll post a copy of these rates later.

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Sat May 1st, 2010 at 11:21:26 AM EST
[ Parent ]
It's never going to develop into commercial level installations

Why not?

The Spanish government recognizes that done right FITs can be used to help develop local industries.

That's true for solar, too. The German PV industry did not grow overnight.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Sat May 1st, 2010 at 02:41:28 PM EST
[ Parent ]
I've updated with the FIT rates, and the change in 2008.

Notice that the anticipated scale of PV installations shrinks enormously in 2008.

The problem with very small PV installations is that they are primarily rooftop affairs.  They aren't going to fuel the creation of commercial scale energy, instead they're a subsidy to the construction industry.

The worst case scenario from the capacity factors given in the original legislation was 15.67% capacity factor.

So that's 1372.5 KwH for every KW of installed capacity.

At a guaranteed rate of 0.32 €/KwH, that's a €439.20 subsidy for every KW installed a year,  €439,200 per MW.  At that rate, you're looking at total payback in a matter of a very few years.

The rate's too high.

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Sat May 1st, 2010 at 01:04:35 PM EST
[ Parent ]
I've updated with the FIT rates, and the change in 2008.

I realise my wording wasn't clear on this, but by the bubble bursting, I meant that the Spanish PV market collapsed already last year, after a leaping record (based on EPIA numbers:

  • 2007: 560 MW new, ~700 MW total
  • 2008: 2700 MW new, 3400 MW total
  • 2009: 69 MW new (no typo!)

That's a burst bubble for you if there is one.

So, again: this new talk of a strong rate cut you highlight in the diary will affect almost only solar cells installed years ago, not ones newly installed en masse now.

The problem with very small PV installations is that they are primarily rooftop affairs.

Why do you see that as a problem?

They aren't going to fuel the creation of commercial scale energy

Again, why not?

The worst case scenario from the capacity factors given in the original legislation was 15.67% capacity factor.

Could you cite the source? (It could be something worth to bookmark.)

At that rate, you're looking at total payback in a matter of a very few years.

That's tricky. Spain re-sets the rate every year, and apply for all units, whether installed years ago for €6000/kW or installed in the near future for €2500/kW. That is the (not known in advance) degression of the rate affects the payback time. So (if Spanish prices are similar to those in Germany) a kW plant installed in Q1 2009 for €3922 would be paid back in around 9 years if the rate stayed constant, but in 20 years if there is an annual 10% reduction.

Put it another way: if you are in Spain and consider installing a PV solar cell, when you calculate whether the FIT rate will make your investment pay for itself, you have to anticipate future rate cuts by the government. Hence, even though 0.32 €/Kwh seems generous, if people suspect that there could be more sudden 25% rate cuts on the horizon, it's no wonder only 69 MW has been installed last year.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Sat May 1st, 2010 at 03:38:11 PM EST
[ Parent ]
So, again: this new talk of a strong rate cut you highlight in the diary will affect almost only solar cells installed years ago

...will affect almost only and is aimed at...

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Sat May 1st, 2010 at 04:05:33 PM EST
[ Parent ]

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