Friday
Jun182010
by 
Bishop Hill
Bishop Hill Spain suspends solar subsidy
Andrew Orlowski reports that the Spanish government is reining back hard on the payments it makes to solar power companies - who are in essence subsidy farmers.
Spanish economist Professor Gabriel Calzada, at the University of Madrid estimated that each green job had cost the country $774,000.
Worse, a "green" job costs 2.2 jobs that might otherwise have been created - a figure Calzada derived by dividing the average subsidy per worker by the average productivity per worker. Industry, which can't afford to pay the higher fuel bills, simply moves elsewhere.
Reader Comments (14)
Dam! I just applied for the night-shift job turning the floodlights over the Solar Panels on!
Lessons: For government, subsidy doesn't usually work, or if it does, not in the way you planned. For industry, do not build a business relying on a subsidy which may be withdrawn at any time. For green believers, if the science/engineering isn't right, it won't work.
A neighbour here in Normandy has enthusiastically installed photoelectric solar panels. He assures me that, because EDF, the electricity supplier, will buy electric energy from him at a high price (higher than what I pay EDF per kWh), he will eventually make much more than he has invested.
I feel less confident that him that in five/ten years, the then rench goverment will feel obliged to continue to honour the promises of their predecessors.
I have trouble understanding how Britain can be spending billions creating an expensive energy economy, while our competitors in India and China are building lovely coal powered energy plants faster than Mcdonalds are built in the west.
If we try to pass the extra cost on to industry then as Mr Orlowski points out, it will move production somewhere cheaper. However if we subsidise it then the taxpayer foots the bill and either way the money comes out of our economy.
Hello Mr Huhne?
By coincidence, I had a brochure listing solar panels through the post yesterday. The largest was 1 square meter and claimed to output 150W max (quite a good conversion rate) which was rather optimistically estimated to give 1kWh per day (in Spain, perhaps). This is worth about 12p, so you can see that without a subsidy, the amortisation period for the purchase cost of £800 would be quite a while, especially as I would need at least 30 of them!
I don't know how many kWh were consumed in its manufacture, but I suspect we're still some way off real self-sufficiency...
Why am I not surprised?
Next, we should see Germany pull the plug as well, and then the whole fecking house of solar panels will come crashing down and smash all those #$(*#@ noisy windmills roaring away on the hillside -- when the wind does blow.
If either windmills or solar panels actually worked economically, then they would not need subsidies -- people would be buying them. Just like those electric cars that cost twice as much as the gasoline (petrol) powered versions. I looked at them once and asked what replacing the batteries would cost. The salesman tried to talk around it, but I forced the issue. The answer was $15,000, about half the cost of the car and this would probably have to be done every five years! That, my dear friends, buys a lot of petrol, even at € 1,30 a liter. And in California, I pay $3.09 a US gallon ( about half what I would pay in ROI, assuming a 1.22:1 exchange rate.)
Then you still have to add in the cost of recharging the batteries overnight on mains power. Since I pay on a progressive sliding scale (in California) -- my electric bill will be a couple hundred dollars more during the summer when I must use the air conditioner.
Even the new hybrid cars don't make economic sense yet. If they can get their cost down to be say 5% more than the all petrol version, then I would get one. But those batteries are a cost killer.
My main problem with Calzada is his assumption that government would have spent the money wisely if it hadn't been spent on subsidies. I think our collective experience should say that is utter nonsense. Having lived in Spain I know exactly where those other 2.2 jobs would have been created - more government jobs to make more petty rules to make you fill in even more useless, duplicated paperwork. They must have 15 photos of me on different government documents still stored away. Filling in useless forms is about 25% of your entrepreneurial effort.
The second thing I'd note is that if you live in Spain you always think it's a travesty that they don't use even more solar power. Solar powered hot water is a no brainer, yet they still ritually use imported propane to heat water. Why? Possibly only the slightly larger installations costs because it sure isn't running costs. A government mandate to use solar hot water would save everyone money.
If only Calzada had a real answer for Spains chronic energy shortfall (causing frequent interruptions in supply) rather than just expecting high-priced, imported fossil fuels to last forever: Imported from fundamentalist Mahgreb no less. On the subject of which I'm not convinced that propane isn't subsidised in Spain. A bottle of gas is around 8 euros there but in France and the UK it costs over 3 times more: Either they are super efficient, or wages are 3 times less, or it is subsidized.
Don Pablo
You're ignoring the depreciation cost of your existing car. I don't know about you but I've lost 10k in depreciation in 5 years. Essentially all you're saying is that an electric car depreciates slightly faster. But the zebra batteries or Lithium-Iron-Sulphide batteries should last a good eight to ten years so it's not as bad as you think. And the fuel is most definitely a lot cheaper than even 3 dollars a gallon.
"an electric car depreciates slightly faster"
More than slightly after about 5 years, I should think! All you new car buyers forget that cars can last a long time after you've been sucked into the 'new, improved' vortex and have traded yours in with ridiculous losses.
The nice thing about non-electric ones is that they run just as well after 10 or 15 years, if reasonably well looked after. Our two cars have a combined age of 38 and can't have depreciated much, because they didn't cost a lot to begin with!
The nice thing about non-electric ones is that they run just as well after 10 or 15 years, if reasonably well looked after. Our two cars have a combined age of 38 and can't have depreciated much, because they didn't cost a lot to begin with!
Absolutely, I run a saab 900 22 years old, 140mph 8 secs to 60 and averages 30mpg, cost me £800 9 years ago and I have spent a max of £800 maintaining it inc tyres and oil. I can't see motoring being any cheaper.
It will be interesting to see how the rest of Europe copes with subsidies in the coming austerity years (if there is any austerity)
"You're ignoring the depreciation cost of your existing car. I don't know about you but I've lost 10k in depreciation in 5 years"
Well, it would quite easy to find a car that lost that much in the 30 seconds it took to drive it out of the new-car showroom. But that would be the buyer's choice.
Thirty years ago, a ten year old car was going to go to the scrapyard at its next MOT, so there was some justification for buying a new (or newish car). Things have changed and, now, paying depreciation on a car is pretty much optional.
JamesG
You're ignoring the depreciation cost of your existing car. I don't know about you but I've lost 10k in depreciation in 5 years. Essentially all you're saying is that an electric car depreciates slightly faster.
No, not at all. I am saying you have to BUY new batteries after some period of time, much like you use to have to rebuild the engine of a petrol or diesel engine years ago. Perhaps in time, you will get a set of batteries that last the life of the car, but I am not ready to accept that it will be for some time yet. So to get that car to go for 12 years, you have to pay thousands for a new set of batteries while it is no longer necessary to put repair money into most modern petrol cars. That is the very significant issue. In the case of your electric car, you have to spend that money somewhere between 8 and 10 years (or probably a lot sooner). To date we do not have sufficient data to say how long those batteries will really last, but lead acid batteries rarely last more than four years, and the lithium hydride batteries I have on my power tool fail in about three.
As steven lewis points out, many petrol engined cars go for many many years with no significant repair costs. I, myself, have a 1996 Nissan Altima with 160,000 miles on it, and while it leaks a little oil, it still is in excellent condition and has just passed it biannual pollution test in California -- which is much more strict than any test you have in Europe. The shop where I have it service says that they have "dozens" of customers with cars having more than 200,000 miles and that I should get at least another 50,000 out of my Altima. Indeed, they showed me one of the same year as mine with 220,000 miles on it. Ran like a Swiss clock.
Buy an electric or hybrid if you want, but don't be looking for an economic advantage. It isn't there yet. Maybe in 20 years, but I doubt it before then.
... who are in essence subsidy farmers.
A chuckle-worthy gem, Your Grace.
Rhoda here must have been so right about saying that you shouldn't put up a business that relies upon a subsidy since this can be pulled out anytime. That's common business sense, I believe. But so often forgotten or neglected.
Daniel Wilson
Solar Andalucia