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.
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-.