There is still billions invested in research, billions circling in carbon markets, and billions tossed as government subsidies. But there are a few less billion available now than there was before Christmas. Reality bites and Green Energy is left to face the music.
Austerity pulling plug on Europe’s green subsidies
by ERIC REGULY , Globe and Mail
The Spanish and Germans are doing it. So are the French. The British might have to do it. Austerity-whacked Europe is rolling back subsidies for renewable energy as economic sanity makes a tentative comeback. Green energy is becoming unaffordable and may cost as many jobs as it creates. But the real victims are the investors who bought into the dream of endless, clean energy financed by the taxpayer. They forgot that governments often change their minds.
When the Spanish economy went into the toilet in 2008 and 2009, austerity measures were put into place. At first, it appeared the solar industry would be spared the worst of the cutbacks. That changed a bit, but only a bit, in November, when a royal decree reduced tariffs by up to 45 per cent on new PV plants; existing plants would remain untouched. Then – whammo! – a new royal decree landed with a thud just before Christmas. While it didn’t change the tariff, it retroactively limited the number of production hours that PV plants could qualify for the subsidies.
Spain’s solar industry lobby group, the Asociacion Empresarial Fotovoltaica, estimated that the second decree would effectively reduce tariffs received by PV plants by 30 per cent, forcing many of the PV companies to default on their debt. Infrastructure Investor magazine called the second decree “the Christmas Eve massacre.”
Shucks. Lets not forget that this is the same attractive tariff that encouraged producers to generate solar powered electricity around the clock — even at night time. Those tricky solar cells were not so much photo-voltaic as diesel-voltaic. The “market” valued solar power so highly that it paid to use diesel generators to produce “solar power”.
Some of those freeloaders were so audacious they kept “generating solar” even at night time, and after 4500 Megawatts had been subsidized, someone somewhere noticed. Those diesel cheats were caught, but who knows how many “day time solar guys with a diesel booster” weren’t?
My heart bleeds for those solar investors who thought they could get rich.
The austerity programs have piled on additional difficulties in the form of subsidy reductions. No government would announce “temporary” subsidies, for fear of scaring off investment in renewable energy. Still, that’s exactly what the subsidies are turning out to be. Investors everywhere are going to get slaughtered as debt-swamped governments trim or eliminate the freebies. The ailing share prices of renewable energy companies such as Spain’s Iberdrola Renovables gives you an idea of the (waning) investor sentiment.
The renewable energy bubble was inflated by government subsidies. Those same governments are now deflating them. Turns out the subsidies were too good to be true.
Hat tip to Helen. Thanks!