Wed May 19th, 2010 at 05:37:21 AM EST
This is a diary by ManfromMiddletown, deleted accidentally and restored thanks to Google cache, h/t Migeru and det - afew
Spanish business daily Expansion recently published an article that explains much of the recent fight over feed in tariffs (FITs) in the country. There are two very different views of when renewables will become profitable without FITs. The graphic below illustrates this clearly.
On the left is the view from the government. Industry expects Photovoltaic (PV), concentrated solar, and wind to pass through the band of market prices to be profitable without FITs between 2014 and 2016.
On the right is what business is saying. The solid blue line is fossil fuels with a CO2 emission cost, and the dotted light blue line is fossil fuels with no emission cost. The deep black is solar technologies, and the grey is wind. If CO2 emissions costs are included, wind will become profitable without FIT sometime around 2013. If not, this will take until 2015. The story is even more dramatic for solar. With CO2 emissions included in electricity costs, solar becomes profitable without FIT around 2018. Without, this will take until 2026 or 2027.
Promoted this time without deletion - afew
In discussing these cuts it's important to remember that Spain is a country that just experienced a 15 billion budget cut, that has provoked large demonstrations against it. While FITs are drawn from energy bills themselves, so that they do not have any impact on the government budget, I seriously doubt that distinction is going to be made by the public. They're experiencing budget cuts and VAT hikes, yet see billions of euros being handed out to energy companies.
I honestly think that Industry has tried to be honest about this, focusing on the argument that the high FIT level is driving up home electric bills, and creating a burden for industry. The gap between industrial and home electricity rates in lower in Spain than most elsewhere in the EU. So, again, the focus from Industry has been on the idea that electric rates are being driven up by the FITs. As Industry notes:
In Spain, FITs comprise 24% of electric bills. This is more than in countries like Italy (14.7%) or Germany(10.4%). But this isn't the most important factor. There are other components that have greater weight, like distribution and transmission.
As large as those numbers look, the merit order effect (MOE) may be either larger or smaller. It seems like a letter to the editor of Expansion or Cinco Dias (the other major business daily in Spain) from a respectable source in the wind energy sector on the MOE would do a lot of good.
Industry would have the resources and the information on hand to conduct a study of the cost of FITs to the benefit from the MOE. This would seem to be one of the stronger cards that the renewables business associations could pull out. Saying, "show me the money" would do a lot to shut down the crowd that is trying to use this to attack renewables more generally, and wind specifically.
Despite statements from the Industry minister that wind is not the problem, there are already attacks on the further expansion of wind in the country. There are up to 5,000 MW of planned wind farms in the air until this planned FIT cut is figured out. Current capacity is 19169.81, so that would be a 26.1% increase in capacity. It's not just the volume that matters. 3 areas (Galicia and both Castillas) have seen the bulk of wind farm construction until now. However in the last year there has been new construction in Catalunya, Valencia, and Andalucia. If the wind FIT gets hit, so will new construction in those areas.
It's all a matter of where the "green scissors," e.g. the FIT reductions, cut.