The Spanish government, faced with runaway success in the rapid scale-up of solar power in the country as a result of its extremely generous Feed-in tariff payment, is now faced with a financial problem caused by the same extremely generous Feed-in Tariff payments.
It had offered as much as ten times the price per megawatt hour for these solar power plants, and was (rather surprisingly) surprised by the overwhelming response. Entrepreneurs built nineteen of the fifty biggest solar projects in the world there, lured by this largesse. So the problem is twofold. They are paying at too high of a rate, but even worse: they are paying for many more megawatt-hours of power than they expected to at that high rate.
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So even though these new solar plants are helping Spain (and the globe) by producing so much clean energy for electricity (and once paid for will add to Spain’s wealth by providing free energy) for now they are just costing too much for the government to continue to buy power from them at such high rates, because there are so many more of them than expected.
One option the government is considering is reducing the allowable operating hours of each solar power plant. Of course as long as the sun is up, the solar plant will be producing power. But the government would buy only those megawatt hours of electricity produced during a portion of those hours each day, instead of during all of them.
This solution brings up two questions.
Would the solar operators be allowed to sell their remaining production hours elsewhere? Would these qualify for carbon credits that individuals could purchase through organizations like Terrapass?
The other issue is that these contracts were for a guaranteed 25 years of production. If they shorten each days “payable hours” would they then spread the 25 year guarantee out longer – over 30 or 40 years?
Lawyers are certain to be busy, as this Royal decree will affect some 3,000 megawatts of solar that Spanish entrepreneurs installed in very short order in response to the incredibly good tariffs.
Image: Flikr user !Arturii!
Source: PV-Tech
Susan Kraemer @Twitter
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