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Spaniards Gird for Solar-Power Fee

Spaniards Gird for Solar-Power Fee
WSJ
Δευ, 21 Οκτωβρίου 2013 - 18:37
Spain's effort to shore up its public finances is about to further squeeze a small but growing segment of the middle class: people who have joined a Europe-wide move toward self-sufficiency by installing solar panels in their homes and businesses.
Spain 's effort to shore up its public finances is about to further squeeze a small but growing segment of the middle class: people who have joined a Europe-wide move toward self-sufficiency by installing solar panels in their homes and businesses.

Diego Nicolas is one. By generating much of his own electricity, the 55-year-old auto mechanic thought he could lower his shop's energy bills enough to recoup the EUR42,000 ($57,000) investment within eight to 10 years.

But that was before the government in July decided to levy a fee on renewable-energy production for personal use. The measure, which is expected to win parliamentary approval and take effect Jan. 1, will raise his costs so much, Mr. Nicolas said, that he won't recover the outlay for about 16 years.

The fee is the latest reversal for Spain 's renewable-energy industry after years of government incentives. It comes despite official assurances that the economy is starting to pull out of a long recession and that tax increases and other austerity measures would become less onerous as a result.

"Now we're afraid to make decisions, to invest a single euro," said Mr. Nicolas, adding that he felt blindsided. "They take away laws, they put in new laws, prices change. It's like being in a bullring with four doors and not knowing from which one the bull is going to charge."

Spanish officials say they are struggling to close a "tariff deficit"--the gap between the cost of running the country's electric system and the revenue it brings--that has put a growing drain on public coffers as the economic downturn reduced electricity consumption.

Forced to slash its overall spending, the government hopes to find EUR4 billion to EUR5 billion a year in savings and new revenue for the electrical grid through the fee and other measures, announced in the summer, that include cuts in subsidies to renewable-energy companies.

Green-energy advocates say the fee, which will vary depending on several factors, such as the grid-connection capacity, could make projects like Mr. Nicolas's financially unworkable, limiting consumers' ability to cut costs at a time of rising utility bills and stagnant wages.

They also say the fee could undermine a new market for Spain 's struggling solar industry just as consumer self-sufficiency is taking off in Germany , Italy , the U.K. and other European countries.

Solar panels are the easiest and cheapest renewable-energy technology to install for most individuals, and falling prices in recent years have made them more widely affordable. In a typical setup, a household or business draws power from its solar panels during the day and from the electrical grid at night. Self-producers generally reduce their purchases from the grid by 30% to 40%, energy analysts say.

The solar industry sees a growth opportunity, especially in European countries that are trying to relieve their overloaded networks by offering incentives for individual producers, said Sam Wilkinson, solar research manager at energy research firm IHS Inc.

In Germany, solar-power generation for individual use is expected to grow to about 12% of all photovoltaic production in 2017 from about 4% in 2012, according to the German Solar Industry Association.

In Italy, systems that store solar power in high-tech batteries, ideal for self-production, will account for more than one-fifth of the new solar-energy capacity installed in 2017, compared with zero last year, according to IHS.

Since Spain authorized self-production in late 2011, solar panels have been installed in as many as 5,000 homes and businesses across the country, people in the industry say. Some had been predicting that the estimated output, now less than 0.1% of the country's total, would grow tenfold by 2020.

The new levy puts those expectations in doubt. Households and businesses that stay connected to the grid for some of their electricity will also be charged a fee based on the power they generate for themselves. The fee is high, surpassing the wholesale price that Spain 's electricity-market supervisor pays gas and coal power plants for the electricity they generate.

The fine for an individual producer who fails to register or pay the fee is even higher--up to EUR30 million, the equivalent to what a nuclear-power producer might pay for a radioactive leak that endangers public safety.

Spain's energy minister, Jose Manuel Soria, has defended the fee and the fine, saying the government must ensure that individuals generating their own power help cover the fixed and operating costs of an electrical grid they would still need when the sun doesn't shine.

Solar-industry leaders call the government's argument absurd. The government is trying to protect the country's five big electric utilities from growing competition from new technologies, said Jose Donoso, director general of Spain 's largest solar-industry trade association.

"It's like buying a more-efficient refrigerator that uses less electricity and having to pay a charge for what you're no longer buying from the electrical system," he said.

After calculating the fee's impact, Inaki Alonso opted to give away the three solar panels he had installed on his roof early this year. The 42-year-old Madrid architect said recovering his initial EUR1,500 investment would have taken 17 to 19 years, instead of the eight years he'd planned on. He gave the panels to a friend with a house in the country that is not connected to the grid.

Mr. Nicolas, the auto mechanic, said his electric bill had dropped about 30% since he installed the panels at his shop in Murcia , in southeastern Spain , about two months ago. The fee will cut those savings roughly in half, but he said he'll keep the panels "because I have no choice and because, surely, it would cost me more to dismantle them."

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