Showing posts with label feed in tariff. Show all posts
Showing posts with label feed in tariff. Show all posts
Friday, March 2, 2012
Thursday, November 10, 2011
Feed-In-Tariff Fail: Is the US Bailing Out Spain's Solar Industry?
Almost a year ago, I posted about the failure of Spain's solar power "feed-in-tariff" program. Simply speaking, a feed-in-tariff is an above-market price paid to an energy producer, subsidized by utility ratepayers or taxpayers.
Any first-year economics student can tell you that paying above market will bring producers out of the woodwork, which will quickly bankrupt any such program. Nonetheless, solar power advocates want to bring feed-in-tariff to Minnesota and the U.S.
Two years ago, the New York Times reported on the collapse of Spain's solar power industry, "Spain's Solar Market Crash Offers a Cautionary Tale About Feed-In Tariffs," quoting the CEO of Spain's Abengoa Solar,
"What's important for the regulation of solar is stability," said Santiago Seage, the CEO of Abengoa Solar SA, one of Spain's largest solar developers. "Unfortunately, up to now, we have had too many changes. ... [And] if the context changes, you can make mistakes in business decisions."
Regardless, Seage stills recommends feed-in-tariff to us in America. The New York Times reports,
"Americans and others would be wrong to avoid the feed-in tariff based solely on Spain's experience, Abengoa's Seage said. 'The feed-in tariff is a mechanism that, typically, Americans don't like,' Seage said. 'They believe it doesn't optimize costs for the taxpayers. ... Nevertheless, I feel it has a huge advantage. It's a simple mechanism to get the market started.' "
Now PJ Media reports the possibility that the U.S. government (and its taxpayers) may be bailing Abengoa out of its "mistakes in business decisions." The Department of Energy's loan guarantee program (think Solyndra) rushed to complete transactions before the program ended on September 30th. One of the last guarantees approved was for an Abengoa ethanol project. Earlier, the DOE underwrote Abengoa solar projects in Arizona. Writes PJ Media,
"Over the last two years, DOE Secretary Steven Chu has awarded Spain-based Abengoa—a sprawling, multi-national industrial firm operating in 70 countries—loan guarantees worth a staggering $2.78 billion for solar and ethanol plants."
PJ Media concludes,
"According to Chris Horner, a senior attorney at the Competitive Enterprise Institute, Abengoa is not an exception, but the rule for the Obama administration’s artificially stimulated “green” industry. He tells PJ Media, 'This is not unique to Abengoa. It defines the [green] industry, which exists in any meaningful way solely due to political creation, not performance or economics.' "
Your tax dollars at work.
Any first-year economics student can tell you that paying above market will bring producers out of the woodwork, which will quickly bankrupt any such program. Nonetheless, solar power advocates want to bring feed-in-tariff to Minnesota and the U.S.
Two years ago, the New York Times reported on the collapse of Spain's solar power industry, "Spain's Solar Market Crash Offers a Cautionary Tale About Feed-In Tariffs," quoting the CEO of Spain's Abengoa Solar,
"What's important for the regulation of solar is stability," said Santiago Seage, the CEO of Abengoa Solar SA, one of Spain's largest solar developers. "Unfortunately, up to now, we have had too many changes. ... [And] if the context changes, you can make mistakes in business decisions."
Regardless, Seage stills recommends feed-in-tariff to us in America. The New York Times reports,
"Americans and others would be wrong to avoid the feed-in tariff based solely on Spain's experience, Abengoa's Seage said. 'The feed-in tariff is a mechanism that, typically, Americans don't like,' Seage said. 'They believe it doesn't optimize costs for the taxpayers. ... Nevertheless, I feel it has a huge advantage. It's a simple mechanism to get the market started.' "
Now PJ Media reports the possibility that the U.S. government (and its taxpayers) may be bailing Abengoa out of its "mistakes in business decisions." The Department of Energy's loan guarantee program (think Solyndra) rushed to complete transactions before the program ended on September 30th. One of the last guarantees approved was for an Abengoa ethanol project. Earlier, the DOE underwrote Abengoa solar projects in Arizona. Writes PJ Media,
"Over the last two years, DOE Secretary Steven Chu has awarded Spain-based Abengoa—a sprawling, multi-national industrial firm operating in 70 countries—loan guarantees worth a staggering $2.78 billion for solar and ethanol plants."
PJ Media concludes,
"According to Chris Horner, a senior attorney at the Competitive Enterprise Institute, Abengoa is not an exception, but the rule for the Obama administration’s artificially stimulated “green” industry. He tells PJ Media, 'This is not unique to Abengoa. It defines the [green] industry, which exists in any meaningful way solely due to political creation, not performance or economics.' "
Your tax dollars at work.
Tuesday, May 24, 2011
(Updated and Bumped) Feed In Tariff Claims Another Victim
Last month, I posted on Consumers Power of Michigan discontinuing their generous feed-in-tariff program for solar power. Reports continue to come in from those in the solar industry hurt by ending the subsidies.
From the utility viewpoint, they ran a program, filled a quota for solar power and now they are ending the program. From the solar industry viewpoint, the subsidies must continue until some distant point in the future when they are no longer needed. The lesson here is not the start the subsidies in the first place. Once started, they are nearly impossible to end.
Consumers offered a feed-in-tariff rate of 65 cents per kWh for solar power (for twelve years), well above the market price of 5 cents for "grid" power. As day-follows-night, the world stampeded to take advantage of this well-above-market price. And now that the utility has slammed the door on new applicants, those that missed out on the windfall are crying foul.
From the utility viewpoint, they ran a program, filled a quota for solar power and now they are ending the program. From the solar industry viewpoint, the subsidies must continue until some distant point in the future when they are no longer needed. The lesson here is not the start the subsidies in the first place. Once started, they are nearly impossible to end.
Consumers offered a feed-in-tariff rate of 65 cents per kWh for solar power (for twelve years), well above the market price of 5 cents for "grid" power. As day-follows-night, the world stampeded to take advantage of this well-above-market price. And now that the utility has slammed the door on new applicants, those that missed out on the windfall are crying foul.
Tuesday, May 10, 2011
Ontario Conservatives Vow to Scrap Feed-in-Tariff
Reuters reports that Ontario's Conservative party is pledging to scrap the province's "feed-in-tariff" scheme if they win in the upcoming election. The Conservatives are now the opposition party, and will end the program that has cost the province billions of dollars.
Monday, May 2, 2011
Follow The Money: Rockefeller Brothers Fund
We resume the "Follow the Money" series by covering the Rockefeller Brothers Fund. In this Google doc, I have listed a few of the Minnesota-related grants given by this group.
My favorite non-Minnesota grant was $400,000 provided to Natural Capitalism Solutions of Colorado last November, for its "feed-in-tariff" program. Trust me, there is nothing natural or capitalistic about feed in tariff. It was one of four grants given by the Fund to this group in 2010 to promote "feed in tariff."
My favorite non-Minnesota grant was $400,000 provided to Natural Capitalism Solutions of Colorado last November, for its "feed-in-tariff" program. Trust me, there is nothing natural or capitalistic about feed in tariff. It was one of four grants given by the Fund to this group in 2010 to promote "feed in tariff."
Tuesday, March 22, 2011
UK Gov't cuts feed-in-tariff for big solar
Last Friday, Reuters reported that the British government would cut feed-in-tariff support for large solar power projects. "Feed-in-tariffs" are above-market prices paid to renewable energy projects to subsidize the introduction of renewable energy technologies into electricity markets. Popular with developers and environmental advocates, they have usually proven too expensive to maintain, resulting in a boom-bust cycle for renewable energy. Reuters reports that the UK will continue to subsidize smaller, household-sized solar installations, and larger projects with reduced subsidies.
Friday, December 24, 2010
Spain Cuts "Feed in Tariff" Rate
Yesterday's Wall Street Journal reports that Spain has further cut its"feed in tariff" rate for solar power. Like my crusade against "revenue decoupling", "feed in tariff" is another popular but catastrophically bad ideas in the world of energy utilities. Simply put a "feed in tariff" is an above market price paid to a solar (or wind) power producer, financed by utility ratepayers (or taxpayers). As any first-year economics student will tell you, if you promise infinite profits to all comers, lots of people will take up your offer.
Yes, the feed in tariff will do wonders to promote renewable energy (hence its popularity), but the open ended nature of the bargain means that whoever pays the costs (ratepayers, taxpayers, utility-company shareholders) will quickly be bankrupted once the land rush to cash in on these high prices really gets going. In Spain's case, the subsidy paid 10 times the market price (for 25 years!). Spain had 6 times more than the amount of solar power sign up than they expected.
Like Germany, Spain has been forced to cut back on solar subsidies because of the impact on ratepayers. But Spain's overall economy is in much worse shape and the subsidies for feed in tariff are threatening to push the country into bailout territory or, at lease, worsen the situation should a bailout be needed.
Yes, the feed in tariff will do wonders to promote renewable energy (hence its popularity), but the open ended nature of the bargain means that whoever pays the costs (ratepayers, taxpayers, utility-company shareholders) will quickly be bankrupted once the land rush to cash in on these high prices really gets going. In Spain's case, the subsidy paid 10 times the market price (for 25 years!). Spain had 6 times more than the amount of solar power sign up than they expected.
Like Germany, Spain has been forced to cut back on solar subsidies because of the impact on ratepayers. But Spain's overall economy is in much worse shape and the subsidies for feed in tariff are threatening to push the country into bailout territory or, at lease, worsen the situation should a bailout be needed.
Subscribe to:
Posts (Atom)