France has halted its solar feed in tariff bubble putting a moratorium on new applications for installing solar panels above for 3 kw installations.This has been done after applications for solar panels exceeded the 500 MW per year target set up by the French ministry.The Prime Minister called the solar feed in tariff subsidies reaching a “veritable speculative bubble”.France has already changed its solar feed in tariffs 2-3 times in 2010 as it tries to fine tune the subsidies so that renewable energy investors earn a decent return.However the fast decrease in solar panel prices has caught the bureaucrats off-guard which is not surprising.Feed in Tariffs in general have been badly designed by most public authorities around the world leading to huge bubbles.Czech has suffered from the biggest solar subsidy bubble on which it recently cracked down through taxes,50% cut in tariffs and other measures as electricity rates increased sharply as subsidies ballooned.Spain and Italy have found their Feed in Tariffs leading to runaway subsidies while Germany which has the most successful FIT program too had to cut FIT by a single ad hoc measure in order to prevent a bubble.
Czech has seen the biggest Solar Growth Explosion compared to its size powered by extremely generous feed in tariffs.This has made Czech one of the top solar installers in the world and led to a huge public backlash.The Czech government has responded by proposing to bust the Solar Energy Bubble by drastically cutting down the Feed in Tariffs.The administration is also trying to reign in the ballooning subsidies from existing solar plants by imposing taxes on solar plants and carbon credits.This is being done as the Czech consumers face a 15-25% increase in electricity prices next year.The country had little option as its very badly designed tariffs had led to a situation where Czech Industry faced the prospect of becoming uncompetitive.
The HPUC has given a FIT rate which is quite low for solar energy and has failed to implement a policy for installations between 500-5000 KW.Also the FIT rates for Concentrating Solar Power (CSP) does not make sense at all for under 500 KW installations.Don’t think there exists a single decent producer of such small CSP plants.The FIT Policy was passed despite stiff opposition from the island’s utilities who questioned the Feed in Tariff as a good Green Incentive.The huge success enjoyed in Europe by FIT did not make a big impression.Note 80% of the world’s solar installations depend on Feed in Tariffs.While there have been bad implementation cases of FIT in Spain and Czech,there have been huge successes in other countries like Germany and UK.HPUC rightly decided to go ahead as trial and errors would be needed . It won’t lead to a huge boom in solar in Hawai due to poor returns however it should lead to some boost to existing solar producers or those who were going to install solar anyway.
United Kingdom a Laggard on Renewable Energy
UK has been the biggest laggard in Renewable Energy amongst the European Union.Despite being a leader in Offshore Wind,it severely lacks in other forms of Green Energy like Solar,Biomass etc.It has been very late in introducing a Feed in Tariff Scheme which has been a huge success in Germany and other countries.While there have been booms and busts caused by poorly designed FIT schemes in Czech and Spain,UK does not suffer from this problem.The Subsidy Scheme adopted by UK favors small distributed installations which is currently the aim of the other EU countries.This review has led to uncertainty in the minds of Green Investors as Government Subsidy is essential for reasonable returns.
Why UK is Reviewing the FIT
The Labour Government which implement this Green Policy has changed and the new PM David Cameron is trying to radically change the Government Policy.He has sharply curtailed the UK Budget and may want to change the Opposition Party set Green Policy as well.This seems to be the only justification behind this move which can only be described as erratic.
Czech is a Poster Boy of how not to implement a Feed in Tariff Scheme.While other countries like Spain,Greece have also faced Solar Booms,the Czech Bubble compared to the size of its Economy has been spectacular.The removal of Tax Benefits will further lower the returns for Green Investors which should probably eliminate the make the Czech Renewable Market next year.
Czech Republic came out with a Renewable Energy Framework which will finish off the Solar Sector in the country if passed in the current form.Czech despite […]
Countries around the world have always managed to shoot themselves on the foot while designing and implementing Feed in Tariff Schemes.Spain did it in 2008 resulting in a Boom and Bust Cycle,Czech is going through the Boom Phase currently while UK seems to be in the starting stage of the Boom.A Bust inevitably follows the Boom,as Bureaucrats never manage to prepare a good incentive scheme to promote Green Energy.It always surprises me how a developed nation government regularly manages to botch up these schemes.
Even Germany has imposed yearly changes on FIT , still it has managed to become the solar capital of the world.2010 was an exception due to a mid year change,still Germany is going to install more solar capacity in 1 month than US’s entire historical installed capacity.This is due to a well laid out policy which instills confidence in investors.The French Government’s FIT cut has good reasons since ground mounted plants have lesser costs and most European countries like Spain are trying to boost residential solar installations.However rapid fire changes are not the answer to a well thought of careful FIT policy.
Ontario had ample opportunity to learn from past experience and its Renewable Energy Subsidy Policy is on the whole quite good.However one part of the FIT program which gave a very generous 80.2c/KwH to micro installations of solar projects under 10 KW was faulty.It led to 160 MW of project applications which were ground mounted with very high production as they used trackers.There was no discrimination between roof and ground mounted micro installations leading to this problem.Note its not possible to install trackers on roofs which can increase the energy by 30-35%.The large number of applications were not factored in by the Ontario Power Authority (OPA) which proposed to retroactively cut those tariffs by 27% for ground plants.
United Kingdom has been a laggard in climate change and global warming issues especially compared to its European neighbours.While countries like Italy,Germany and Spain have installed […]
Italian Solar Feed in Tariff Cuts to be More Moderate than Market Expectations The German government allowed a face saving gesture to the Upper House by […]
Most of these reports had been quite vague but a recent report explicitly mentions that Danish Pension Funds writing to Spanish and EU investors voicing their concerns.With such Big Players joining the fray,its no wonder that Spain is reconsidering its whole Energy Policy.
Background on Spanish Government’s proposal to cut Solar Subsidy on Existing Plants The Spanish government has been actively discussing with industry groups on how to reduce […]
According to the Spanish Solar Power Lobby ASIF,the Spanish government (under Pressure with Spanish Banks facing Funding Problems and Spanish Bond Yields Rising) is proposing a […]
China has been rumored for a long time to mandate a law to provide for a higher electricity rates for renewable energy production (Feed in Tariff) […]
We all know what happened in Spain in 2008.Due to extremely generous feed in tariffs for solar , installers went on a spree installing 2.5 GW […]
Rooftop Solar Continues To Grow Exponentially In Australia Due to high energy prices and low solar energy prices, Australia has become one of the best places […]
Yieldcos TerraForm, the yieldco formed by spinning of the solar assets of SunEdison (SUNE) has seen a tremendous response to its IPO. The company raised more […]
The incompetence of government authorities and bureaucrats around the world continues to surprise me as renewable energy subsidies keep going haywire. The script followed is the […]
All posts published on GWI for the Week Ending 16th September, 2012: Japanese Industrial Conglomerates follow Korean Shipbuilders into Offshore Wind Energy The growth potential in […]
Japan Entering the Japanese market is notoriously hard for foreign companies as they run into major implicit and explicit barriers. Like the Chinese, the Japanese have […]
Renewable Energy is Easter Europe has boomed driven by government incentives and subsidies.Many of these countries like Estonia,Bulgaria and Czech are cutting or already have cut generous feed in tariffs paid to Green Energy Investors.While Czech has seen an unprecedented Solar Boom leading to a massive public backlash,Estonia and Bulgaria have seen huge wind energy projects.The Green Energy has boomed in the last 2 years mainly as governments in these countries try to meet the Renewable Energy Target of 20% by 2020 set by the European Union.These East European countries have been hit hard by these EU directives as the costs have spiralled