The solar industry may be growing by leaps and bounds in some places around the world, but Spain is definitely not one of them. Spain has the third-largest budget deficit amongst euro countries, and in an effort to cut the gap the government has cut off subsidies to renewable-energy companies, forcing them to relocate to favorable nations or go out of business.
European Wind Energy Association CEO Christian Kjaer responded bluntly to the cuts, saying that “they destroyed the Spanish market overnight with the moratorium” and that the “wider implication of this is that if Spanish politicians can do that, probably most European politicians can do that.”
From 2004 to 2011, Spain invested $69 billion in clean energy sources, more than three times that spent by the U.S. In 2011 alone, $1.5 billion was invested in solar photovoltaic installations. The subsidy cuts will see that figure drop to only about $107 million by 2013. And because of these cuts, companies are packing up and leaving town, headed to South America and Asia. T-Solar, the world’s largest solar-farm operator, is moving to Peru.
“If you take such a brutal measure, what you do is oblige the industry to move out,” said T-Solar’s Managing Director Juan Laso.
While a recent Forbes article quoted a researcher stating that “the Spanish market was already essentially dead for solar” starting back in 2009, Spanish Prime Minister Mariano Rajoy eliminated the renewable energy subsidies to solar, wind, and biomass companies in January 2012 as part of an effort to trim the nation’s deficit.
Spain is already meeting its goal of getting 20 percent of its energy load from renewable sources by 2020, generating 23 percent in 2010. So while the country doesn’t have an immediate need for more renewable energy power plants, the country’s National Energy Commission wants the cuts to stay in place until 2017 – which may have a dramatically negative affect on the industry in the long term. Manuel Sanchez Ortega, CEO of solar thermal company Abengoa, stated that “if it lasts more than 18 months we are running the serious risk of driving all this industry out of the country.”
Italy and Germany have already cut subsidies for solar production this year, and now with Spain following suit for all of its renewable energy projects it is up to the rest of the world to continue the forward momentum on developing additional clean sources of energy.
[via Bloomberg]
Image Credit: Miguel Angel Garin/Flickr