Is Spain investing in the past instead of in the future?

Spain is decreasing subsidies for solar energy while investing money in renewing the license for an existing nuclear plant? While the country is considered at the head of the pack in solar energy, the Spain has currently cut subsidies for solar energy. At the same time, Spain is spending money to renew the license for Garoña nuclear plant in the North of the Peninsula.

The Spanish´s Official Newsletter (BOE) published on January 28, 2012 a Decree-Law 1/2012 which “removes, indefinitely, [...] the financial incentives for new installations of the Special Regime until the problem is fixed the tariff deficit”.  In other words, companies will no longer receive fiduciary benefits from installing solar panels as a form of renewable energy as was the situation in the past before the economic crisis. In addition, this Law “indefinitely suspends the registration procedures in the register of pre-allocation provided by the Decree-Law 1578/2008 (for solar photovoltaic installations)”. This Decree-Law of 2008 announced a remuneration of the production of electricity by photovoltaic solar technology, which now has been abrogated for 2012 and subsequent years.

Mariano Rajoy, the President of Spain, said with this recent law all government support for new renewable energy projects would be halted. While, in the same Decree issued on 1/2012 explained that “the final report of the Nuclear Safety Council on tests conducted at Spanish plants indicate that all Spanish plants meet the safety standards needed to cope with earthquakes, other natural phenomena and various large-scale accidents”.

In light of these events, the debate about the renewal license of Garoña nuclear plant has re-opened. According to Nuclear Energy Institute (NEI) the lifespan of a nuclear plant license is 40 years.  If Spain follows this statute, it will mean that nuclear stations are designed for a four decade period. Garoña´s license expired in the Spring of 2009 when it the closure was agreed upon. Nowadays, The Nuclear Security Counsel (CSN) has reversed its agreement obtaining a renewal of twenty more years. What are the consequences?  On the surface, few consequences appear immediately.  But there are very harmful repercussions. And are there alternatives? What could they be?  Might they be favorable for humankind. 

In Spain there are 1,839 solar companies that have been established throughout the fifty provinces, according to solarweb, the most complete list of companies in the net. If these numbers are compared with the eight nuclear power plants in Spain, the difference is enormous, according to data provided by the CSN. If solar energy statistics are put into context, the photovoltaic power output, 3,386 MW, establishes Spain in the second position in the ranking of countries with the most installed solar energy in MW, just behind Germany (U.S. Energy Information Administration, Ecoworld, 2012).

There is good news! Solar energy consumption reached its record in July 2011. Photovoltaic Industry Association (ASIF, July 2011) data shows that 5% of the energy demand was covered by solar energy. However if this data is compared with the nuclear energy consumption which is 22%, there is still much more to do.

Source: Spanish Electric Grid (REE), July 2011

The drawback is renewable energies in general and solar energy in particular are not used to its maximum capacity. The Spanish National Action Plan for Renewable Energies (PANER) 2011- 2020 specifies that Spain is characterized, from an energetic point of view, by a structure of imported petroleum product consumption (p.12). This data is ratified by the World Nuclear Association (WNA) when it says that a fifth of its electricity is generated by its eight nuclear reactors.

New developing countries, new risks

However, solar panels in Spain are not developed as much as they could be. This situation leaves an open door for foreign markets as China or India whose governments are moving to stimulate domestic solar demand.

According to the new report on clean energy 2011 promulgated by Pew environment group, “US reclaims worldwide lead in clean energy investment” where the study shows that they invested more than $48bn in the sector in 2011, up from $34bn in 2010. In second place is China as “a dynamic hub of clean energy activity in terms of manufacturing and deployment”. It is noticeable to mention that Germany and Italy are noted as having  “solar deployment and investment soar”. As well as in India where “clean energy investments increased 54% in 2011” to $10.2 billion.

Spain is becoming an important source of clean energy production within the EU. “Almost 90% of the investment ($7,6 billion) was directed toward asset financing in the solar sector”, positioning itself in the forth position (64%) of solar investments behind of Italy (83%), Japan (79%) and South Korea (70%).

Distribution of investment by sector (2005-2011):

(Source: Bloomberg New Energy Finance; February 2012)

However, this data losses its value if the Decree-Law 1/2012 is taken into consideration since the cost of subsidizing renewable becomes unaffordable without financial incentives. Also, WNA provides again specific data about the consequences of this situation: “Solar has also been promoted with a feed-in tariff about EUR 30 c/kWh, but the take-up was so high that the government had to renege on its subsidy commitments in 2010 after investments had been made, almost halving those for large plants” (April 2012).

Achievement vs Competitiveness

Spain meets all the requirements to promote optimal use of solar energy thanks to its geographical location and appropriate climate. Spain is one of the European Union´s countries with the highest amount of solar exposure, however its  privileged position is not being exploited to its fullest potential. The main obstacle in the use of solar energy is the the initial large investment that is required in technology.  An advantage that Spain has is that a solar installation can be located anywhere in the country and it will produce energy and economic savings on the investment.

The Spanish National Action Plan for Renewable Energies (PANER) 2011- 2020 predicts that “by 2020 the share of renewable in our country will be 22.7% of final energy and 42.3% of electricity generation”. The data is contained in the advance of the Renewable Plan 2011-2020, submitted by the Ministry of Industry, Tourism and Commerce to the European Commission pursuant to its own directive on the matter (2009/28/EC), which includes targets for mandatory renewable energy for the EU and individual Member States in 2020, and the development of national action plans to achieve those objectives.

Perhaps we can say that Spain aspires to become one of the biggest drivers of this type of energy in the world. This is a sunny country is currently ranks high among countries with this type of investment. Luckily, maybe this kind of “industry” will help Spain overcome the crisis if they make a proper use of positive resource management.