English: PS20 and PS10 in Andalusia, Spain (Photo credit: Wikipedia)
Spain’s moratorium on new green tech subsidies and the prospect that other budget-stressed European governments will slash incentives for solar and wind projects have roiled a once-rich market for renewable energy companies but will have little impact globally as developers move into Asia, Latin America and South Africa, according to analysts and executives.
“The Spanish market was already essentially dead for solar,” says Shayle Kann, vice president for research for GTM Research in Boston, noting that previous cuts to generous incentives in 2009 had already sent Spanish developers into a tailspin and accelerated their move into international markets.
Martin Simonek, an analyst at Bloomberg New Energy Finance in London, notes that Spain installed about 360 megawatts of solar in 2011 compared to 7.5 gigawatts in Italy. That country poses a bigger threat to renewable energy developers as Italian lawmakers contemplate slashing a premium paid for solar energy that could result in only 4 gigawatts being installed this year.
“It’s definitely not a growth market,” says Simonek.
Germany, Europe’s biggest solar market, is also likely to further reduce renewable energy incentives but such a move has long been expected and developers have compensated by moving into emerging markets elsewhere, analysts say.
Spanish companies have led the charge. Renewable energy giant Abengoa, for instance, is making 90% of its capital expenditures outside of Spain while 53% of its revenues in the first quarter of this year came from outside of Europe, the company stated in a recent earnings presentation. Abengoa is building two large solar thermal power plants in the United States.
In February, Spanish solar company Isofoton accepted a $300 million investment from a Chinese company as part a deal to develop solar power plants in Asia.
SolarReserve, a Santa Monica-based builder of solar thermal power plants, last year inked a joint venture with a Spanish partner and won a government award to build a 50-megawatt project.
“Theoretically, the government is allowing those projects awarded last year to proceed,” says Kevin Smith, SolarReserve’s chief executive. “The difficulty is that these are big projects and require a substantial amount of financing and the markets are pretty jittery right now.”
Smith said SolarReserve aims to complete the Spanish power plant but is looking to the U.S., South Africa, the Middle East and Latin America for future growth. The company is building 238 megawatts of photovoltaic projects in South Africa and has put in a bid for a large solar thermal project in that country and is active in Australia, China and Saudi Arabia.
“The rest of the world seems to be picking up the slack,” says Smith.
In just about every market, he says, SolarReserve encounters formidable Spanish competitors.
“The support the Spanish government provided over previous years has created some powerful renewable energy companies,” says Smith.
The end of European subsidies is unlikely to derail the global solar market for another reason, notes Simonek: Thanks in part to competition from low-cost Chinese photovoltaic manufacturers, solar panel prices have plunged 75% in recent years.
“The fact remains the PV is getting so cheap it can grow without any subsidies,” he says.
