Spain Considers Raising Solar Installation Cap

By: Ucilia Wang

The Spanish government could vote as early as this Friday on a revised solar incentives proposal that would raise the 2009 installation cap to 500 megawatts from the previously proposed 300 megawatts.

The revised proposal would add an additional 200 megawatts for the ground-based solar power arrays in the country, reported Reuters. The Spanish government initially proposed a 100-megawatt cap for ground installations. Then a proposal approved by the country's energy commission in July called for a 250-megawatt cap for ground installations (see Spanish Energy Commission Votes to Shrink Solar Incentives).

In the latest proposal, the total rooftop installations for the country in 2009 would be capped at 200 megawatts.

The country's energy secretary Pedro Marin submitted the proposal to the cabinet after meeting with a solar industry group AEF on Tuesday. The cabinet is scheduled to meet on Friday, but Marin told Reuters he couldn't be certain whether the cabinet would approve the revised proposal.

The current incentives will expire by the end of September.

Spain's Photovoltaic Energy Industry Association spent the summer lobbying to increase the installation cap, while at the same time the government was considering an overall 300-megawatt cap and a reduction of solar-electric rates by as much as 35 percent for 2009 (see Spain Could Reduce Solar Subsidies by 35%).

Spain has become a lucrative market for solar companies worldwide thanks to its generous subsidies program, which requires utilities to buy solar power at government-mandated rates through long-term contracts.

The country originally set a 400-megawatt cap to last from 2007 to 2010, but the solar market reached the limit within the first year. The government froze the incentives - a move that has allowed solar companies to continue to take advantage of the program while lawmakers debate a new program (see Is Spain Shining Too Brightly). 

As a result, solar companies have rushed to lock in the existing incentives before the lower solar-electric rates are expected to take effect. In fact, Spain is likely to see more than 1 gigawatt of new installations for this year.

Marin "could not comment" on the solar-electric rates, or feed-in tariffs, that are part of the revised proposal, Reuters reported.

The earlier proposal called for reducing the rates to 33 euro cents per kilowatt-hour for electricity from the rooftop systems and 29 euro cents per kilowatt-hour for power plants on the ground.

The current price is about 45 euro cents per kilowatt-hour, depending on the size, not the placement, of the solar panel installations. The price has increased from 42 euro cents in 2007 to allow for inflation adjustments.

Solar panel makers in Europe, the United States and Asia have done brisk business in Spain. But uncertainties over the future incentives in Spain have worried many companies. During a solar conference in Spain earlier this month, speculations circulated about the likelihood of the government raising the cap to as much as 500 megawatts (see Solar Industry Convenes in Spain, Makes News and Analysts Pick Next Years Solar Winners).

The solar subsidies are intended to gradually make solar electricity cost-competitive with conventional power. The German government also haggled with its solar industry earlier this year over feed-in tariff reductions (see Solar Prices Set in Germany).

The news of Spain's willingness to raise the installation cap arrived just before the U.S. Senate approved nearly $18 billion in tax incentives that would extend a tax credit for solar power plant developments for eight years as well as provide a slew of tax credits for other renewable energy investments (see Senate OKs $18B in Tax Credits).

The Senate bill will head to the House for approval. The existing renewable energy tax credits expire at the end of 2008.

The good news has boosted solar stocks Wednesday. SunPower Corp. (SPWR) saw its shares rise 9.12 percent to $95.49 per share in recent trading. First Solar's (FSLR) stock leaped nearly 7 percent to $224.97 per share in recent trading. Other solar stocks that experienced similar boost included Evergreen Solar (ESLR), Trina Solar (TSL) and Suntech Power (STP).

Comments

[DarkStealth:]

With financial support from Spain & the US, it looks like the solar industry is heading in the right direction. When you factor in higher coal costs (at least from the railroads which ship the coal), lower costs per watt for solar panels, as well as transmission & siting issues limiting wind energy's growth in the US, it seems more utilities will be forced by their state renewable portfolio standards to invest in more solar, including utility-scale power plants (like the 850MW plant - the size of a large coal plant - that Sunpower & another company started building recently). How can you not be bullish on solar right now?

2008 Sep 25 06:31 AM

[gebby:]

so now will these solar stocks rise reflecting these positive developments?

next reason to sell solar growing pains and the need to finance expansion. capital needs could be at risk because of tight credit conditions.

the media campaign against solar doesnt end.

2008 Sep 25 09:14 AM

[Steven Ward:]

Spain is one of the few countries that can make large strides in these efforts. But again, we have either a government subsidy or a forced purchase at un-competitive prices. For any alternative energy to succeed sooner or later they must stand or fall on their own. This includes the conventional; oil and gas industries as well. Any subsidies to them should have ended long ago in the US after oil crossed 40 dollars a barrel.

2008 Sep 25 10:40 AM

[tessant:]

spain needs to show some more confidence here..

2008 Sep 29 11:42 AM