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The profitable nature of solar power in Spain has given rise to strange installation locations, such as this plant which towers over a cemetary.  (Source: AP)
Spain has found a controversial way to boost solar adoption

When it comes to solar power, the real dilemmas are efficiency and cost.  On the one hand, efficiency has steadily improved over the last couple decades to the point where it’s approaching the utility prices of other power generation methods.  Exotic technologies promise even greater gains.  However, the price of solar-generated power still remains at least five times as expensive as coal-power, the chief source of power in the U.S. (compared to the leading candidate, nuclear, which is approximately 1.5 to 2 times as expensive).

While solar adoption from a cost standpoint is unattractive, there's much debate over whether commercial adoption is needed to spur further research to propel solar into the realm of cost competitiveness.  While many nations like the U.S. and China have modestly taken this position, adopting solar at a moderate rate, one nation has fallen head over heels for solar -- Spain.

Spain is allowing solar and wind power plants to charge as much as 10 times the rates of coal power plants, making it possible for solar power installations to earn utilities big money.  On average, recent rate increases have raised solar charges to over 7 times the rates of coal or natural gas rates.   The costs are added onto consumers' power bills.

The results are mixed; while Spanish power bills are at record highs, the number of deployments is soaring.  Spain has 14 GW of solar power, or the equivalent capacity of nine average nuclear reactors, under construction -- the most of any nation.  Florida’s FPL Group Inc. and French Electricite de France SA are among the many jumping to build in Spain.

Gabriel Calzada, an economist and professor at Rey Juan Carlos University in Madrid, states, "Who wouldn’t want to enter a business that’s paid many times more than the market rate, and where the customer is guaranteed for life?"

By 2009, 42 percent of Spaniards energy bills -- approximately 95 euros ($127) on average -- will be provided by alternative energy.  Spanish law requires power distributors to buy all clean energy produced in the first 25 years of the plants' lives.  The government also recently raised the rate of Spain believes this sacrifice will pay off as fossil fuel resources become depleted and emissions standards tighten.

Karsten von Blumenthal, an industrial analyst at Hamburg-based SES Research GmbH states, "The guarantee is more attractive than what other countries offer.  Actually the U.S. has better space for solar, in the deserts of California and Nevada."

The U.S. meanwhile is also advancing thanks in part to President Obama's solar initiatives passed earlier this year as part of the federal stimulus legislation.  Over 6 GW of capacity is planned for the U.S.

Fred Morse, an official at the Washington- based Solar Energy Industries Association trade group and author of the first report to the White House on solar power (1969), says that the U.S. needs to adopt more incentives if it hopes to catch Spain.  He states, "The incentives, if implemented promptly and effectively, should greatly facilitate the financing of these plants."

One promising benefit of the Spanish solar boom is that it is increasing the number of plants utilizing new, potentially more efficient technologies like solar thermal or sterling engines.  Spain is limiting the number of photovoltaic plants (solar panel-based designs), but is giving out unlimited licenses for solar thermal and other alternative plants.



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RE: Charging more for Solar
By oab on 5/13/2009 9:52:31 AM , Rating: 4
42% of the average Spanish electrical bill that is made up of solar is 95 Euro. It is the solar part that has the 7x market price attached to it, the coal, gas, nuclear power is still sold at market price, so the bill is not just 7x higher.

Your bill on average is about $121, So, 42% of 121 * 7 = $355 + 70 = $425.

HOWEVER

Utility companies in their bill often charge separately for power used (mine is $40) plus "transmission fees" which are fixed (mine is again about $40), so the total bill is $80, but only half of that is power used, the rest is a fixed cost that even if I use no power, I get billed $40.

Meaning, if your bill is anything like mine...

121-40 = 81 * .42 = 34 * 7 = 238 + 81 * .58 = $285 for electricity only, plus transmission fee of $40 = $325.12

Make no misunderstanding, it is still fantastically expensive, however it is just over a third of what you expected it to cost.


RE: Charging more for Solar
By Keeir on 5/13/2009 3:21:18 PM , Rating: 2
Although I agree changing the whole sale price of a section of the power won't lead to a 1:1 ramp of the price to the consumer, I think your overlooking a few things

#1. "Transmission" costs are likely to increase as a greater percentage of power sources are not controllable in thier variability. One of the best advantages of both Nuclear and Coal as power sources is the low risk assosiated with counting on a plant to produce X power at Y time. Spain may be able to maintain lower "transmission" costs by borrowing stability from France/Italy/etc... but in the long term, I expect thier "transmission" part of the electric bill will also increase due to higher solar usage.

#2. Raising electric prices by 2.5x (your number) will lead to price increases of well... pretty much everything. In the end, Spain residents will likely pay the industrial/commerical sections an additional dollar in higher prices for each dollar thier personal electrical bill raises. (In the US, industry/commerical power usage is slightly larger than residental, and any good company passes 100% additional costs onto consumers often with a 10% upcharge for higher profit margin on the additional marginal costs)

If such as system (7x price and ~40% usage) was used in the United States, where the average household uses around 11,400 kWh of electricity per year, this would result in an additional 3-4+ thosand a year out of people's pockets to pay for...


RE: Charging more for Solar
By foolsgambit11 on 5/13/2009 4:06:33 PM , Rating: 2
Right, except that 42% of the power will be alternative energy by the end of the year. A significant portion of that 42% is wind power. Another post in this article mentioned that the wind is much more prevalent than solar in Spain.

Of course, this policy will most likely tilt the balance more toward solar, but at the moment, the part of the bill charged at the 7x rate is pretty small.

Wikipedia (yeah, I know, but I'm not going to put the effort in to double-check these numbers) says targeted installed solar capacity in Spain by 2010 is about 3GW, and that current installed wind capacity is 16GW. Of course, each tech has varying real output compared to nominal capacity, &c. But for a simplistic evaluation, we can guess that about 6% of total electricity is from solar.

So with your numbers, 81 * .06 = 5 * 7 = 35 + (81 * .94) = 111 + 40 = 151. In other words, instead of the power bill being some 600% higher, it's only about 25% higher.

That's still too much for FITCamaro and others like him, I know. But we are talking about an order of magnitude difference in the increase, so it's significant to note that fact, in case it matters to some here. (As if there were any people at DT on the fence on the issue... or any issue....)


RE: Charging more for Solar
By Keeir on 5/13/2009 4:56:14 PM , Rating: 2
Although the article does not directly provide information on the rates of Wind Power

quote:
Spain is allowing solar and wind power plants to charge as much as 10 times the rates of coal power plants, making it possible for solar power installations to earn utilities big money.


Apparently both Solar and Wind can charge as much as 10 times the rate of coal.


RE: Charging more for Solar
By foolsgambit11 on 5/13/2009 5:38:21 PM , Rating: 2
Yeah. I missed that. Must. Work. On. Reading.


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