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.