Spain scuttles clean-energy subsidies; promptly watches the industry go down like a sinking ship

posted at 10:02 am on May 30, 2012 by Erika Johnsen

Serious question, greenies: is a nation justified in completely running its economy into the ground, with all of the hardship and heartache that ensues, if it’s all for the sake of instilling the populace with what the government deems necessary environmental virtue?

Saddled with a budget deficit more than twice the European Union limit and a ballooning gap between income and costs in its power system, Spain halted subsidies for new renewable-energy projects in January. The surprise move by Prime Minister Mariano Rajoy one month after taking office helped pierce investor confidence in stable aid for clean energy acrossEurope.

“They destroyed the Spanish market overnight with the moratorium,” European Wind Energy Association Chief Executive Officer Christian Kjaer said in an interview. “The wider implication of this is that if Spanish politicians can do that, probably most European politicians can do that.”

Spain’s $69 billion of investment in power capacity from 2004 to 2011 was about triple the spending per capita in the U.S. in that period, according to Bloomberg New Energy Finance data and U.S. Census Bureau population estimates. Most of the 2012-2013 spending will be for the legacy of projects approved before the aid cuts to wind, solar, biomass and co-generation.

Investment in solar photovoltaic alone is headed to skid to as little as $107 million in 2013 from $879 million this year and $1.5 billion last year, New Energy Finance estimated. For new wind projects, investment should plunge to $963 million in 2013 and $244 million in 2014 from $2 billion this year.

Here’s the message that Spain’s green-subsidy policies sent out to the world: ‘Hey, if you’ve got an idea for a green-energy project that you don’t think can compete on its own merits and turn a profit in the free market, come on over to Spain and we’ll hook you up with some sweet subsidies!’ Ergo, it should hardly come as a surprise that fiscal emergency has forced Spain to put an indefinite hold on the subsidies, and the clean-energy companies are immediately flocking to greener pastures.

Yikes. Didn’t really think that one through, did you, Spain? Germany is often heralded as a world leader in clean energy development, but in 2009, Spain’s clean-energy consumer bill rose to 6 billion euros, ahead of Germany’s 5.6 billion bill — except that Germany’s economy is almost four times bigger than Spain’s. They rushed headfirst into that one, and with top-down large-scale policymaking like that, it isn’t happenstance that their unemployment rate is currently sitting at a miserable 24 percent.

Environmentalists may argue that our worldwide fossil fuel-based energy infrastructure isn’t sustainable in the long term — even though the evidence for imminent climate-change and peak-oil crises are extremely dodgy, at best — but fiscal insolvency is demonstrably unsustainable in the long term. While some of the eurozone members’ clean-energy ‘investments’ may not be the root cause of their present crisis, they are wildly indicative of the type of no-holds-barred, feel-good spending binges that have brought them down this road. Europe just keeps on proffering examples of precisely what governments shouldn’t do, but alas, will the United States ever listen?

And, as ever, my usual disclaimer: I have nothing against alternative energy. I only ask that it follows the sustainable recipe for success signaled by the free market, rather than the economic noblesse oblige of the federal government’s political whimsy.


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Comment pages: 1 2

Hydrogen for cars is a waste of time and energy. The only appeal it has in this application is zero pollution, and by that I mean real pollution, not CO2. Cars sold today however have emission controls that are so advanced that their emissions are negligible.

The cost in terms of real pollution and dollars that it takes to manufacture Hydrogen makes the use of that Hydrogen in a vehicle not a significant improvement over the use of gasoline.

This might change if dirt cheap energy from fusion is developed some day that can be used to manufacture Hydrogen, but that’s not on the horizon.

slickwillie2001 on May 30, 2012 at 2:04 PM

Sooo…I’m trying to understand all of this. Did Spain actually think these various green technologies would magically become truly sustainable (read: profitable), did they just assume the rest of Europe would bail them out for being so noble, or were they just clueless?

Bob's Kid on May 30, 2012 at 2:07 PM

The problem with hydrogen as a fuel, is almost the same as electric, IT’S THE STORAGE,genius. If there was no problem with storing hydrogen or electricity in a tank like you can with oil or gas, we would already be using it. If the storage of electricity or hydrogen was easy then you could have electric or hydrogen jets in commercial aviation, until then, anything other than oil for transportation is a STUNT!

bigmike on May 30, 2012 at 2:26 PM

24% unemployment! how’s that socialism working out for you Spain?

burserker on May 30, 2012 at 2:39 PM

Hey, these subsidies were for a noble cause – to protect that most inviable of species, the spotted environmentalist!

Seriously, if throwing money at green energy is out to pasture, where does that put AGW?

paul1149 on May 30, 2012 at 2:42 PM

They are only in it for the subsidies.

Solar was the energy of the future. In 1976.

Wind was the energy of the future. In 1996.

Why do they still need subsidies?

The future is NOW, in case it has been missed.

Let them compete on pure return on investment, and see what happens to these industries.

In fact get rid of ALL subsidies to ALL industries, including Ag and Education and see what happens.

Wheat, chaff: separation is needed before consumption.

ajacksonian on May 30, 2012 at 2:46 PM

You cannot achieve 100% efficiency. Theoretical best would be 50% conversion, actual would be closer to 40% with clean new panels so we’re actually looking at around 400 watts peak. Even with tracking capability you’d be doing good to average 100 watts per hour for the 12 hours of sunlight. Take a lot of solar cells to pump out a megawatt.

Oldnuke on May 30, 2012 at 11:55 AM

I know this, that is why I said “IF”.

esnap on May 30, 2012 at 3:11 PM

I have heard the argument that hydrogen is a “battery”, which is crap. Hydrogen can be found anywhere there is water

Bulletchaser on May 30, 2012 at 1:22 PM

Water is hydrogen ash “H2O” it is burnt water.
it takes power to un-burn it.
To un-burn it you have to remove the 2 oxygen atoms. This is typically done via electrolysis which takes “theoretically” the same amount of power you get when you re burn the hydrogen.

But due to entropy and resistance etc. you actually loss net power in every process.

Not only is there no perpetual motion machine, there is nothing even remotely close.

esnap on May 30, 2012 at 3:17 PM

I know this, that is why I said “IF”.

esnap on May 30, 2012 at 3:11 PM

Wasn’t arguing with you, sorry if it came out like that. It’s pretty obvious that you know what you’re talking about. I was just musing a little. I ran the numbers a few years ago but didn’t remember what they were. I did remember that it took an awful lot of real estate to even come close to generating a significant amount of electricity. The company I worked for built a solar test plant back in the 80s it was state of the art at the time. About the only way I could describe it would be pathetic. It caught on fire one night while I was on shift and burned to the ground. It had operated for several years by that time and was in no danger of paying for itself, ever.

Oldnuke on May 30, 2012 at 3:27 PM

Ed,

There’s no such thing as “fossil fuels”. Oil is a renewable resource, see Thomas Gold’s “The Deep, Hot Biosphere”.

http://www.pnas.org/content/89/13/6045.full.pdf

joshlbetts on May 30, 2012 at 3:31 PM

So, what you are saying is that you want Obama to win. You are either a troll, a fool, or both.

jqc1970 on May 30, 2012 at 12:18 PM

I don’t want Obama or Obama lite to win… And giving those choices I won’t soil myself again like I did in 2008 by voting for McCain… I love how Mitten’s record is irrelevant to u… The only thing that matters to u is what he is telling u today… If u need other Politicians to keep u’r President honest then u don’t have a honest President… And u don’t have a leader but a follower…

I guess I am a fool for holding the GOP accountable for who they say I don’t have a choice but to support… I am not on the GOP plantation… And at best u can’t tell me what is Mitten’s core… At best he is only a mirror of the legislature (He will bend to what they desire which by the RINO’s we got running the Senate & House will at best be Moderate or slightly left) & @ worst by his own words… A Progressive running as a Republican…

But sure… I am Troll for not buying the BS…

Y314K on May 30, 2012 at 3:43 PM

The problem with the politician is that he thinks it is his job to tax and regulate good ideas and subsidize bad ideas.
Greg West 2012©

esnap on May 30, 2012 at 4:17 PM

Bob’s Kid on May 30, 2012 at 2:07 PM

Wild guess:

1. Come with us to Bill’s Corral.
– I want to go to Prodigy Time Techno.

2. We’re all going to Bill’s Corral. Get with the program. PTT is bad.
– OK. Fine. But I don’t think PTT is bad.

3. It’s nice here with all the cool people at Bill’s Corral.
– Since I have a choice, I’m going to PTT now, so I can hit on some techno-babes.

4. PTT is now closed forever. It was bad. Hit on cowgirls from now on like we all do. Don’t be a Luddite.

—— It’s that darn #4 snapping like a bear trap that no one ever seems to see coming. :)

When I look at the credit exchanges, and the massive private and public investments and everything — it doesn’t make any sense at all — till #4, when the great change is complete and the old spigot is literally turned off. Suddenly photovoltaic is the cheapest electricity you can get (or whatever is the cheapest.)

Brondo has what plants crave.

Axe on May 30, 2012 at 6:21 PM

Sooo…I’m trying to understand all of this. Did Spain actually think these various green technologies would magically become truly sustainable (read: profitable), did they just assume the rest of Europe would bail them out for being so noble, or were they just clueless?

Bob’s Kid on May 30, 2012 at 2:07 PM

I’ll take a stab at this one….

YES

rocker98 on May 30, 2012 at 10:40 PM

Apparently there was a little brouhaha about my assertion that hydrogen fuel cells may someday replace petrol as an energy source. I know that it’s not 100% efficient — but no energy source/storage method is. Like any energy technology, it will become widespread if and when it eventually becomes economically feasible. Economically feasible =/= 100% efficient.

gryphon202 on May 31, 2012 at 8:54 AM

You know that the commenters that challenged your assertion are technically savvy enough to know something so obvious. Again, the problem with hydrogen isn’t the fact that it’s not 100% efficient.

blink on May 31, 2012 at 11:42 AM

I do think it’s inevitable; that’s all. I don’t know how long it will take, but decarbonization of fuel sources has been going on for literally thousands of years, step-by-step. Unless there is some inexplicable reason for history to come to a grinding halt, decarbonization will continue. I think you are reading a bit much into my assertions, Blink. I am making an educated guess based on what has happened in the past, and should I have different information to support a different conclusion, I will gladly admit I was wrong.

gryphon202 on May 31, 2012 at 6:10 PM

hey looky here…a stale blog post to freshen up

DanMan on September 25, 2012 at 4:18 PM

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