The Spanish government’s decision to cut solar power subsidies on Christmas Eve has seen it dubbed the “Solar Grinch of 2011” by market analysis firm EuPD Research.
Citing budget necessities relating to the global financial crisis, Spain will make significant cutbacks to subsidies for solar farms on the Iberian Peninsula. The cap on funding will include existing installations, and will limit the amount of kilowatt hours (KwH) of electricity solar power stations can sell back to the national energy grid under Spain’s feed-in tariff scheme.
When governments make dramatic changes to subsidies of their renewable energy industries, the effects can be dire for investors. A recent slashing of the New South Wales Solar Bonus Scheme from 60 cents per KwH to 20 cents per KwH led to fears of a collapse of the home solar power industry in the state.
According to Markus A.W. Hoehner, CEO EuPD Research, it is too early to tell what the fall-out from the Spanish cutback will be. Spain’s Deputy Industry Minister, Pedro Marin said solar energy must take a back seat to more pressing concerns in the economy, such as keeping energy prices low for consumers. But Hoehner believes that, if anything, breeding uncertainty in the nation’s solar industry will only harm Spain’s fiscal prospects and represents a breach of trust with investors.
“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.”
EuPD Research claims that over the last several years countless pension funds invested significant amounts of money in Spanish solar funds, hoping for a stable return.
