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  • Let the Sun Set on Solar Subsidies

    The country that leads the clean energy economy will lead the global economy. We’ve heard some version of that story a number of times from President Obama, whether it be in his State of the Union address or trying to sell the stimulus at wind and solar manufacturing plants across the country. Countries like Spain and Germany are leading the race in the clean energy; as President Obama says, “they’re making real investments in renewable energy.” But what’s at the finish line? If Spain and Germany provide any indication, it’s a slumping economy, and both countries are cutting back the subsidies:

    E&E reports:

    Only two years ago, Spanish solar energy companies feasting on generous government subsidies expanded at a feverish pace, investing €18 billion (then worth roughly $28 billion) to blanket rooftops and fields with photovoltaic panels. They briefly turned the country into the top solar market in the world.

    Then came a monumental case of sunburn. The market crashed under a wave of subsidy cuts, fears of possible forced tariff paybacks and allegations of fraud involving energy produced at night being sold as solar power to collect super-premium prices.

    Spain’s subsidies for solar were four to six times higher than those for wind. Prices charged for solar power were 12 times higher than those for fossil fuel electricity. Germany and Spain received about 75 percent of the world’s photovoltaic panel installations that year.

    Spain is not the only European country cutting solar subsidies. On July 1, Germany will cut the price paid for electricity from roof-mounted solar panels by 16 percent and that from larger solar power stations by 15 percent. France cut its solar subsidies in January by 29 percent after the installed capacity more than doubled from 105 megawatts in 2008 to 250 megawatts last year. Italy, considered by analysts the first market where solar is likely to become competitive without subsidies, is considering a gradual decrease in tariffs between 2011 and 2013.”

    It would be encouraging to see solar and wind be cost competitive without subsidies and reducing government dependence will determine if that can be the case. Germany’s Environment Minister Norbert Roettgen is taking a more sensible approach, saying, “Our solution is innovation instead of subsidies.” That’s an approach we can support and it should be the approach for all energy sources.

    Posted in Energy [slideshow_deploy]

    9 Responses to Let the Sun Set on Solar Subsidies

    1. TonyfromOz Coomera Q says:

      To install a rooftop solar panel system enough to cover your daily electrical consumption means an investment of between 20k and 45K. The Government pays you back an incentive of around 30% of that.

      The panels generate electricity during daylight only. Any excess is then sold back to the grid at a rate approximately 4 times what you pay for what you use FROM the grid, again, incentive.

      However, during non daylight hours that same house with rooftop solar consumes power from the grid, and this is during Peak power periods when electrical consumption is at its highest.

      So, in effect, you are still a nett consumer of electricity FROM the grid.

      With the subsidies from the sale of your excess TO the grid, then this only becomes revenue neutral.

      You cannot say that you are producing what you use, because the grid is not your personal electrical storage, similar to a battery.

      If there were no subsidies for installation, and then subsidised resale of excess back to the grid, then these large systems would never sell.

      They have a life span of around 25 years, and without those subsidies would not be returning the investment before they run out of life.

      What you sell back TO the grid only covers what you use FROM the grid when the Sun isn't shining, plus a small excess, again subsidised.

      In effect, you are still nett users of power from the grid, and that is only achieved by bribing you with other people's money in the form of both those subsidies.

    2. TonyfromOz Coomera Queensland Australia says:

      Further to this, I feel sure that there will be our environmentalist friends out there who will say that these subsidies are okay, and they will find a way to rationalise that what they feed back to the grid during the day is similar to what they use from the grid for all other times the Sun is not generating their power, again not true, because the most electrical consumption in all households is from 6PM until midnight, and they are still using that power FROM the grid, and will do so until the Suns starts to power their panels again.

      See how many of them would actually pay for the full system if there were no subsidy for installation, and the feed in tariff was the same as what they pay for the electricity they then use from the grid.

      A similar comparison might be for the Government to give you back one third of your outlay on a Prius, and then subsidise the fuel you then put into it to the tune of you only pay one third of what everyone else pays per gallon. People would then buy those Prius’ like they were going out of style, filling them up, and siphoning off the fuel for their regular car.

      So, rorting of the solar panel scheme actually is in fact those subsidies.
      Panel owners are ‘sponging’ off the rest of those people who use what the grid provides, because realistically what they feed back is not being held for them to then use after hours, but is feasibly being consumed by other users, and they are then asking for 4 times that amount of money just for doing that.

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    4. David Brands, San Diego says:

      What you failed to mention is that the oil industry in America continues to get tax breaks despite making billions of dollars annually in after-tax profits. Why is this?

      You also failed to mention that the nuclear industry was heavily subsidized by the U.S. government when it was developing as a power source after WWII. Today, with 104 nuclear plants around the nation, American taxpayers continue to subsidize nuclear power plants by underwriting their insurance which no private companies will cover. Why is this?

      You say in the last paragraph that you support “innovation instead of subsidies” but you single out solar power. Why is that?

      I agree solar should make it on its own and it could happen within five years. But nearly every technology which has shown promise on a large scale has had some form of government support to nurture its development and diminish its cost for general use. And yet there are those technologies which are fully developed and implemented and continue to get government support. Why is that?

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    6. Nicolas Loris Nick Loris says:

      David,

      I point out solar because of the E&E hook and the massive financial assistance our administration is committing to renewable energy. We've argued against subsidies for oil and nuclear power as well.

      See, for instance, "Don’t Stop with Fossil Fuels: End Energy Subsidies Altogether"
      http://www.foundry.org/2009/10/06/don%E2%80%99t

      And we've written extensively on nuclear loan guarantees, most recently being, "Don’t Let Nuclear Industry Get Hooked on Subsidies"
      http://www.foundry.org/2010/04/23/dont-let-nucl

    7. TJS, FL says:

      Defending huge solar subsidies by pointing at the nuclear and oil subsidies reminds me of the logic of children arguing with parents. One bad act does not justify another. Besides, the taxes paid by oil and nuclear far outweigh their subsidies. All subsidies should be ended. The market will provide the solutions, if they are viable.

    8. Drew Page, IL says:

      We have all heard about how smart Spain and Germany were to invest in "green" energy and how we would do well to emulate them. Maybe this is why Mr. Obama wants the U.S. to become a social democracy like theirs. Maybe this is why Mr. Obama wants to create an economy as bankrupt as theirs has become.

      Who would have thunk it? Greece, the once proud "cradle of democracy", now with an economy in ruins as bad as its ancient architecture. This is what comes of the "everything for everybody" philosophy engendered throughout the European social democracies including Greece. Can the rest of the European Union be far behind? There are signs, at least in the U.K. and Germany, that people are waking up to the fact that the government cannot provide for all the needs and desires of their people.

    9. jon, sd says:

      I do think these do-gooder companies should get some small subsidies to entice them to enter the market, fuel competition, and invent better products/more efficient way to produce GREEN ENERGY! One interesting new business model is Envision Solar's. Envision solar is making solar groves in parking lots so cars of the future can conveniently charge using solar energy.Check out some revolutionary plans at&nbsp ;http://envisionsolar.com/video/

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