By EuPD Research, edited by Renewable Energy Focus
The turn of the year saw international solar photovoltaic (PV) markets in vivid motion. While an increasing number of countries such as India or more recently Turkey are on the verge of successfully introducing solar subsides to strengthen their domestic industry and simultaneously meet their climate objectives, the Spanish Government has become the new Solar Grinch of 2011.
It was on Christmas Eve that the Spanish administration decided to make significant cut backs to subsidies for solar PV plants installed on the Iberian Peninsula. The precarious budgetary situation has forced the Government to make dramatic cutbacks entailing an additional reduction over the next three years, even for existing installations.
The government is proposing a cap be placed on the number of hours of subsidised generation that solar plants can sell to the grid.
Whereas up to 1753 hours could have been fed to the grid by fixed solar PV systems in the past, now a maximum of 1250 processing hours will be remunerated over the next three years. Systems mounted on single axis trackers will now only be funded for the first 1644 hours; systems with double axis trackers will see payments for the first 1707 hours only.
An adjustment that will apply to all solar PV plants connected to the grid by September 2008. As compensation, solar PV plants will receive the feed-in tariffs for three more years in the future – an extension from 25 to 28 subsidised years.
Unforeseeable impact for industry and fund investors
According to Spain's Deputy Industry Minister, Pedro Marin, these reductions are necessary to grant the Government "some leeway" in keeping consumer energy prices at a moderate level while Spain navigates its way through tough times of economic uncertainty.
“Au contraire” is to be heard from the side of investors and analysts. Such hasty changes are considered a breach of trust and increase uncertainty throughout the whole renewable energies industry in Spain.
Exactly how the latest cut backs to solar funding will be felt throughout the industry cannot as yet be foreseen.
However, analysts at EuPD Research believe that the impact will be significant.
“But not only the PV industry and its directly or indirectly related spin off industries will suffer from the decision made in Madrid – millions of Spanish senior citizens and pensioners, as well as fund investors all over the world will feel the impact of this decision”, says Markus A.W. Hoehner, CEO of EuPD Research. Over the last years countless pension funds invested significant amounts of money in Spanish solar funds, hoping for a stable return.
Spain cuts, Turkey introduces feed-in tariffs
Renewable energy has played a minor role in Turkish energy generation thus far as the main sources have been gas, coal, as well as hydropower. However, the Turkish Government intends to further diversify its energy mix and renewable energy generated by domestic production will be of particular importance. It should, according to government plans, make up a total of 30% of the Turkish energy supply by the year 2023.
Both wind energy and geothermal are expected to play a major role here. In addition, other renewable sources such as photovoltaic should also become of greater significance.
Turkey has had a renewable energy law since 2004 which also funds solar PV. However, very few investments were actually made in the technology as a result of comparably low feed-in-tariffs of €0.055/kWh.
As demand for energy increases and in line with adjustments to developments in Europe, renewable energy is now set to be pushed even more. The Turkish Ministry for Energy has decided that remuneration for PV systems should be extended to €0.133/kWh in a base tariff.
Complex approval procedure
Furthermore, an additional bonus of up to US$0.067/kWh will be paid for solar PV systems consisting of locally produced components whereas US$0.092/kWh will be paid for all CSP systems built with local equipment.
However, the downside is that these tariffs will only apply to “licensed energy producers”, meaning that each plant owner has to obtain an authorisation before feeding energy to the grid. This might be tolerable for commercial suppliers but could also be seen as bureaucratic barriers that might deter investment in private, small-scale systems.
At the same time, the law also limits the total production capacity of these “licensed solar energy companies” to 600 MW up to 31 December, 2013.
However, Taner Yildiz, the Turkish Energy and Natural Resources Minister, does not consider this a hindrance to investment. “I am sure that our investors will do business at these prices”, Yildiz told Hürriyet Daily News.