Monday, March 25, 2013

Subsidy-free Solar Projects in Spain?

In what could be big news, an article from Renewables Energy World entitled First Large-scale Solar Plants Without Subsidies Seen in Spain speculates that subsidy-free photovoltaic projects may be upcoming for Spain.  Costs of solar panels have dropped something like 65% this past year as solar panel maker SunTech in China declared bankruptcy.  So, we're seeing liquidation pricing for panels that may or may not be sustained.  Solar subsidies in most of Europe are being scaled back due to budget concerns.

The applications for projects are based somewhat on speculation that solar panels prices will drop further:
Solaria plans to build a 150-megawatt solar park near Toledo for less than 150 million euros and sell the electricity for 55 euros to 60 euros  a megawatt-hour [$0.06 to $0.07 per kiloWatt-Hour wholesale cost], according to Carrasco. Solarstrom seeks to develop a 165-megawatt project in Extremadura along with local partners. The regional governments of Extremadura and Murcia have announced their support for the solar projects in their areas.
“We can be the first to develop a project without subsidies,” David Carrasco, Solaria’s marketing and sales director, said in an interview in June. “We will build it in the second half of 2013 because we think the cost of photovoltaic will have dropped enough by then and, given the irradiation in Spain, will be totally competitive.”
There's another factor mentioned in the article.  Utility-sized solar projects may cause localized overcapacity in the electric grid due to low electricity demand caused by the economic depression in Spain.

Even if this news is somewhat speculative, it is indeed good news especially when I see these projects based on 6 or 7 cents per kilowatt-hour wholesale prices.  Even these speculative prices are up to TWICE the cost of conventional power in the US, but still competitive in markets where retail electricity prices are $0.12 to $0.15 per kilowatt-hour.

In a recent blog, I mention that Germany's Solar Projects Are a Bust due to the lack of sunshine in Germany.    Interestingly, Spain has basically double the sunshine per annum.  Average annual sunshine in Germany is something like 1450 hours whereas Spain has close to 3000 hours of recorded sunshine per year.

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