Will the Ease of doing business in India, really ease the Solar business in India
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March 21, 2016Spain’s Solar Policy
Spanish policy towards solar energy has been hostile over the last 5 years, after a solar boom in 2008 led to a massive bust. The large subsidies given during the solar boom led to a ballooning of the country’s deficit, leading to a retroactive cut in those feed in tariffs. This led to many bankruptcies as the IRRs of the investors became negative, as nobody could foresee that the 20 year PPA would be dishonored by the government. While there were many law suits filed against the government by numerous financial investors, all of them failed to pass muster as the courts rejected them.
Read more Solar subsidy pain in Spain
With solar electricity now competitive with retail price of grid electricity, home owners now can install rooftop systems which would provide cheaper power as compared to buying from the utility. However, the Spanish government has turned so hostile towards solar electricity that they charge money from homeowners, even if they go totally off the grid using a mix of energy storage and solar electricity. This has managed to make Spain a non-entity in the global solar market. However things may change in the coming future, with a new ruling dispensation that may come to power.
This coalition of parties is removing some of the most toxic provisions in the solar legislation. The highly unpopular “sun tax” and other levies will be removed within 100 days of this new party coming to power. This will allow Spanish market to move to normal levels something akin to Germany, which is currently installing around 1500-2000 MW a year without much subsidies getting paid. Spain will also become a major self-consumption market like Germany and Italy, where solar power is used along with energy storage since the high electricity tariffs imply that it is cheaper to do storage+solar rather than buying from the grid. I think for most European countries where electricity tariffs are high, solar + lithium combination is a good sustainable solution over the long term to meet the increasing energy demands as well as substitute demand from fossil fuel sources.