Trouble in the Solar Power Industry

Decree takes shine off solar industry

April 8th 2009
Photovoltaic equipment manufacturers are cuffed by government constraints and delays in approving licenses for projects are the bane of PV equipment producers.

The Spanish government’s decision last year to rein in the country’s burgeoning solar power sector has put a damper on the ambitions of manufacturers supplying equipment to the industry.

The changes in the regulatory framework for photovoltaic (PV) solar power — in which solar cells directly convert sunlight into electricity — proved too much for BP Solar. The British firm announced last week it was closing its two factories in Spain and laying off 480 employees. After massive expansion in the period 2006-2008 in which solar power installed capacity grew from 144 megawatts to 2,661 MW, other manufacturers present in Spain such as Isolux- Corsan, Bergé and Gestamp are also feeling the squeeze. Companies rushed to complete projects before the government decision took effect, while plans for expansion have either been totally shelved or greatly scaled back.

The reason lies in the decree approved in September last year establishing a new regime for PV power plants after the government felt the mushrooming industry was getting out of hand. The new legislation puts an annual cap on new installations of 500 MW a year assigned on a quarterly basis through a licensing system. The decree also lowered what was paid to PV power producers from €0.42 per kWh to a range of €0.32-€0.34. The cut in rates paid to suppliers was accepted by the industry as manufacturing costs had been brought down by some 30 percent over the past year, allowing solar energy parks to remain viable.

However, the chairman of Siliken Energía Renovable, Carlos Navarro, argued it would have been better if the changes had been phased in. “There wasn’t any need to change things overnight,” Navarro says. “In Germany, they gave the sector time to adjust by gradually lowering rates paid” to PV suppliers. The ceiling on new installations, however, has proved more of an obstacle to the development of the industry. “It’s a third of the size of a market such as Germany,” says Juan Laso, the chairman of the PV business association AEF. “That reduces the industry’s ability to compete. “We wanted [a cap] of 800 MW, which is more in line with the size of the Spanish market, and the production capacity of companies in Spain.”

But what has raised the hackles of PV equipment manufacturers the most are delays by the Industry Ministry in approving solar power licenses. The ministry did not announce the list of approved projects until mid-February, more than a month later than planned. Ministry sources acknowledge the problem, but add that they have been overwhelmed by license requests, many of which were incorrectly filed. Given the restrictions in the domestic industry, Spanish companies are now looking increasingly overseas for business.
F. B. / A. S., Madrid, El Pais International Edition April 8th 2009

Unless otherwise stated, the content of this page is licensed under Creative Commons Attribution-ShareAlike 3.0 License