Photovoltaic bubble in Spain.

During the period 2004-2010, one of the former Spanish government targets was to make Spain an international power in the field of renewable energies, a champion in sustainability matters. Obviously, this was the right wish.

With the will of achieving urgently this illusion, unskilled politicians promoted among investors the idea of a new and sure business by the artificial way of granting large subsidies –RD -Real Decreto-436/2004 and RD 661/2007-. The operation worked out successfully. Enormous investments in solar photovoltaic plants were done. According to different sources: in 2008 were installed in Spain 2,700 Mw, more than 50% of the whole world’s solar investment; in 2009 the solar industry sucked up in subsidies 2.9 billion €. The photovoltaic bubble was ready to blast off.

The weak point of this operation is that it was carried out blindly with the only background of the idea of what is politically correct and without a serious analysis of the sector; stakeholders bought prematurely a very expensive photovoltaic technology only with the government promises as a guarantee.

The crisis uncovered Spanish photovoltaic bubble.

Golden Gate Bridge is reflected in a soap bubble by Brocken lnaglory. Used under CC BY-SA 3.0. No changes were made.

In 2010, the same government blew up the photovoltaic sector when decided retrospective cuts of 30% to solar energy tariffs –Real Decreto-Ley 14/2010-. The political justification was the unpredictability of the crisis. Since then, international funds such as AEG Solar, Element Power, Charanne, Green Power, and some other owners of more than a third of the installed photovoltaic energy in Spain have claimed against the Kingdom of Spain –because the former government action- in the London Court of International Arbitration (LCIA) and the Arbitration Institute of the Stockholm Chamber of Commerce (SCC).

The worse, and this is the reason for mentioning here this case, is that during this period apparently, nobody became aware of the fact of the accelerated evolution of the photovoltaic silicon cells´ technology that was achieving high-efficiency panels with going down prices. The perfect storm was set up; stakeholders saw that the price of the photovoltaic watt that they have paid in 2008 urged by governmental strategy was in 2012 six times lower, resulting in billions of losses.

Today, photovoltaic energy is close to grid parity –the point where the levelized cost of energy is equal to or cheaper than the purchased from grid power- and surely it is a good business, but in 2008 was quite premature to start the photovoltaic venture with so great intensity.

PS. Currently, as a consequence of this evil heritage, but continuing the same unwise path, the new government is trying to mitigate the problem with more taxes –see “Out of ideas and in debt, Spain sets sights on taxing the sun” by Kelly Phillips Erb, august 2013, Forbes-.

From   «ESCOs, Myth and Reality»  Ribes&Casado

Qué hacer con España.

César Molinas no es de esos economistas mediáticos que necesitan exhibir regularmente sus poderes paranormales para predecir, ante el primer medio que se les cruza, un futuro que nunca se cumple. Vamos, no es un premio Nobel.

Que hacer con españa cesar molinas ___

Molinas, economista y matemático, tiene un largo recorrido en el sector público y también en el privado. Ha sido DG de Planificación del Ministerio de Economía y alto cargo en la CNMV, Renfe, Correos y el CDTI en la etapa socialista de González; posteriormente ha pasado a ser directivo de Merrill Lynch en Londres para en la actualidad ser socio de una consultora y una empresa de capital riesgo. Cuando habla sabe lo que dice.

Se puede considerar instigador intelectual de muchos de los debates actuales en España, particularmente gracias a su libro, publicado en 2013, «Qué hacer con España».

Varias pistas:

  • Su subtítulo es “Del capitalismo castizo a la refundación de un país”.
    Está estructurado en tres partes: a) “Hacia dónde va el mundo”, b) “De dónde viene España”, c) “Qué hacer con España.
  • Acusa a la clase política de generar distintas burbujas, además de la muy manida burbuja inmobiliaria, la de las infraestructuras y las renovables.
  • Propone un Plan Marshall en I+D+i, la educación y el emprendimiento.

Nada que ver con los que se dedican a expedir etiquetas de progresismo y conservadurismo. Los argumentos y datos por encima de la verborrea tertuliana.

Una lectura inexcusable para interesados en España y su ubicación en el mundo y en el tiempo.

European contradictions.

In the EU, there´s a wide line of thought that, when referred to energy matters without any other consideration, imagines Europe as the “Green Camelot” of the industrialized world –with the exception of realistic countries such as Sweden, France, or Britain-. Many times, this is the deep essence of critical reviews on the United States and China policies.

Three contradictions

Actually, the European position is not as crystal clear as it pretends to be. There are a few contradictions:

First contradiction: Energy Supply Security. Europe has no energy resources, with the exception of Scotland-UK and Norway; these must be imported. But, in times of conflict, the peaceful EU supply depends on the US international means –Central Asia, Arabian Gulf, Mediterranean South-. What is the cost of this dependence? And the risk?

Second contradiction: Energy Affordability. Of course, a logical option for Europe is renewable energy because it provides autonomous and green power. But, there´s a problem: currently, renewables are far from grid parity with the exception of wind power.

Energy affordability is higher in countries with a reasonable share of renewables. According to WEC 2012 Index data, France, the United Kingdom, Sweden, or Finland pay between 0.16 and 0.22 USD per kWh, while in the opposite side Germany pays 0.32 and Denmark 0.36. Comparing these data with North America, we have to know that US citizens pay 0.12 USD per kWh while Canadians only pay 0.09 USD.

Intensive green policies are available for rich countries like Denmark, but it is a social problem for the poorer. In fact, in January 2014, because of the pressure of public opinion, Spanish electricity suppliers have shown how the real cost of power paid by consumers is only the 38% of the total bill; the residual 62% are taxes and levies that end up in government coffers.

Also, there is a similar scenario when drivers refuel their cars with gasoline –petrol- or diesel. Most Europeans pay taxes between 3 to 4 USD per gallon –this is taxation from 50 to 60%-; Americans only pay 0.5 USD -source: New York Times NYT-. The different price between Brent Crude and West Texas Intermediate hasn´t to do with such different taxation; it is a simple matter: it is a hidden financing source for European governments. But, what will be when most cars become electric vehicles? How will be compensated this loss of governmental income?

The extreme-renewable policy is inconsistent with energy affordability; so, it has a negative social impact. Environment protection is a praiseworthy aim, but it has an economic cost that´s mirrored by the energy bill beyond the regular taxes as VAT. Someone has to pay it.

Third contradiction: Energy Impact on Health and Environment. In Europe, there is a wide popular sensibility against energy technological progress because of its potential environmental risk or its immediate impact. This sensibility is against nuclear power, shale gas, and even against hydro-power or wind-power.

The point is that mostly this rejection is against the “concept itself”. To claim a good guarantee –for example, with respect to fracking technology- is logical, but it isn´t the case. It seems to be a matter of distrust, ultra-eco-ideology, and ignorance of real data. How many Europeans know that shale gas is very similar to conventional natural gas with less than half-life cycle greenhouse gas emissions than those of coal-fired electricity generation? –see 2012 “Natural Gas and the Transformation of the US Energy Sector: Electricity” National Renewable Energy Laboratory NREL with the cooperation of experts from the University of Colorado-Boulder, the Colorado School of Mines, the Colorado State University, the Massachusetts Institute of Technology, and Stanford University-.

European contradictions
Designed by Gerd Altmann from Freiburg, Deutschland

This resistance ignores, or hides, the lung cancer, heart diseases and deaths caused during the last decades by carbon emissions from fossil fuels: in Europe 455,000/year premature deaths according to European Environment Agency EEA . It is annually, much worse than the forecasted thousands of victims of the 1986 Chernobyl disaster in Ukraine/USSR, – see United Nations UN 2005 Report “Chernobyl´s Legacy: Health, Environmental and Socio-Economic Impacts and Recommendations to the Governments of Belarus, the Russian Federation and Ukraine”. In America, 200,000/year early deaths are due to analog causes according to the Massachusetts Institute of Technology MIT’s Laboratory for Aviation and the Environment. The same could be said about acid rain and global warming.

From an environmental point of view, national governments are conscious that high energy consumption rates are incompatible with fossil fuel technologies, but sometimes, due to electoral reasons, policymakers are too sensible to public pressure –Germany case, as a reaction to the 2011 earthquake and tsunami that devastated Fukushima with the consequence of the incident at its old technology nuclear plants-. Does anyone remember how many deaths or diseases have been caused by the Fukushima nuclear incident?

Without any doubt, environmental risk must be under control within reasonable ratios. However, it is convenient to remember the known Roosevelt’s thought: “Only thing we have to fear is fear itself”. It is because this irrational fear to a potential impact on health and the environment stops progress and makes to last longer the worst scenario: the current one.

There still is a fourth contradiction, but, in this case, the US and EU positions are coincident. Governments with an active eco-speech against CO2, subsidize intensively the polluting coal industry. –for US, see 2011 “Mining Coal, Mounting Costs: the Life Cycle Consequences of Coal” Center for Health and the Global Environment at Harvard Medical School and “Federal Coal Subsidies” by Source Watch-.- for EU, see 2010 “Germany wins extension of coal subsidies” by and “EU coal nations win fight for subsidies to 2018” by Reuters- . Only extra-environmental reasons, such as lobbies and mining unions´ pressure or energetic independence, justify this contradiction.

From   «ESCOs, Myth and Reality»  Ribes&Casado

Globo sonda al auto-consumo.

La reciente aprobación de la Ley 24/2013, del Sector Eléctrico pone de manifiesto cómo el borrador de Real Decreto sobre auto-consumo no ha pasado de ser un globo sonda contra el auto-consumo.

Si comparamos las fechas de ambos documentos, vemos que la propuesta del Real Decreto firmada por Alberto Nadal es del 18 de julio y, sin embargo, la de la Ley aprobada es 26 de diciembre del mismo año.

¿Cómo es posible que un RD de desarrollo se anticipe a la Ley que lo debe enmarcar? ¿El equipo que redactaba el RD no tenía que ver con el que concebía la Ley? ¿Los redactores forman parte de distintos gobiernos?

La CNE ya alertaba en septiembre sobre lo extraño del procedimiento. Su preceptivo informe es bien claro al respecto.

Se trata de un escenario no creíble. Más bien forma parte de un juego para medir las reacciones ante medidas restrictivas para el auto-consumo. Medidas restrictivas que priorizan la necesidad recaudatoria sobre los beneficios de todo orden que se derivan del auto-consumo.

Weather balloon just after release in Elko, Nevada by Famartin. Used under CC BY-SA 4.0. No changes were made.