MADRID (Reuters) - Photovoltaic solar power plants are springing up throughout Spain, capitalizing on special tariffs for renewable energies and exceeding the government’s expectations.
With the current momentum, Spain will be over its target for 2010 of 400 megawatts (MW) of photovoltaic (PV) power by next summer, possibly having somewhere between 800 MW and 1,200 MW, according to the Industry Ministry.
“We already have 80 percent of the target,” Industry Minister Joan Clos said at a European energy conference in Madrid earlier in October.
Feed-in tariffs, initiated in 2004 to reach the European Union’s goal of increasing renewable energy use to 20 percent by 2020, guarantee energy produced from renewable resources will be bought at three times the normal market value for 25 years.
“It’s an attractive business for financial entities and promoters,” said Francisco Garcia, manager of Spanish electrical installation company Elecnor’s photovoltaic department, which is setting up 80 MW of PV installations.
“The utility has the obligation of giving you a connection point to the grid.”
PV cells produce electricity when struck by the sun.
Gilbert Cohen, Senior Vice President of Acciona Solar Power , which is developing a 46 MW plant in Portugal, speculated that much of PV’s success had to do with more companies lobbying for incentives.
Cohen has doubts they will be able to reach 1,200 MW next year, saying PV cells are not abundant and are expensive.
“The reason there are incentives is to reduce the cost... Well, they’re trying ... China’s getting big on supplying PV cells, Spain has factories, but it’s still very limited capacity - every factory can provide 40 or 50 MW a year... for another 900 MW they need a lot of supply,” he said.
All factors included, PV solar plants can cost about 6 million euros ($8.47 million) per megawatt, about 30 percent more than expensive than solar thermal power and roughly five times as expensive as a coal-fired plant.
“In about 12 years plant production costs will be paid off,” said Carlos Galdon, director of PV installation company Avanzalia’s 13.8 MW plant in Salamanca, which cost about 100 million euros and can generate power for around 5,000 households.
Spain’s current renewable energy consumption is 19 percent, with wind and hydroelectric power making up the bulk.
At 1,200 MW, PV power would still only account for 0.4 percent of total power.
Germany, with about half as many sunny days as Spain, initiated a similar government incentive scheme in 2000 and has approximately 3,000 MW of PV power.
Peers Piske, director of German PV installation company City Solar Group’s 20 MW plant in Beneixama, Spain, said Germany’s PV output is due to a great number of homeowners with small installations capitalizing on the tariffs to sell to the grid.
“In Spain,” he says, “there are more big plants, from one to 25 megawatts.”
Incentives in Germany have led to a total of 250,000 jobs in the renewable energy sector.
Spain’s Ministry of Industry estimates that at the current production rate it will have 200,000 new jobs by 2010.
Investors and politicians are optimistic that in six years the incentives will no longer be necessary.
Costs are expected to fall as competition spawns cheaper, more efficient solar technologies allowing firms in the sector to sustain themselves at normal market prices, they say.
Industry Ministry officials said that once there are 1,200 MW of PV solar power, the tariff rate will be reduced by 5 percent each year.