POWER June 2011 - 30

POWER POLICY
Spain: A Renewable Kingdom
Spain has served as both exemplar and scapegoat when it comes to renewable
energy policy. Though power policy must necessarily accommodate specific
national resources and goals, Spain's experience as an early and eager
adopter of renewable energy technologies and subsidies is a cautionary
tale of how the best intentions can have unintended consequences.
By Sonal Patel
S
pain, the fifth-largest economy in the
euro zone, has been slammed by the
global economic crisis and faces a critical
energy dilemma. Struggling to tamp down
power prices, but unable to afford billions of
euros in funding, the debt-burdened government
has been forced to retroactively slash its
subsidies for renewables-a measure that has
frozen investment in renewables and battered
the nation's once-booming solar industry.
Meanwhile, policies to phase out coal power
have destroyed Spain's domestic coal mining
industry and prompted debilitating strikes
by coal miners. The nation's nuclear power
sector, too, is under siege: A moratorium on
building new reactors has driven the government-amid
opposition that was intense even
before the Fukushima Daiichi emergency this
March-to extend the lives of aging reactors.
The Kingdom of Spain saw more than two
decades of dizzying economic growth before
the abrupt contraction in its economy in mid2008.
Its gross domestic product (GDP) growth
rate reached a historic high of 1.53% in December
1997 and a record low of -1.70% in March
2009. The nation exited the recession last year,
but it continues to face soaring unemployment.
Nearly 20% of Spain's 45.9 million people are
jobless-the highest rate in the 27-member
European Union (EU). Despite government
efforts to boost the economy through stimulus
spending and loan guarantees, the government
budget deficit increased from 3.8% of GDP in
2008 to about 11% in 2011. To control the deficit
(and reduce it to 6% by next year), as well
as avoid financial contagion from other highly
indebted euro zone members like Ireland and
Greece, the government has implemented austerity
measures, tried to privatize industries, and
attempted to boost competitiveness through labor
market reforms.
Most economists blame the economic
woes on a burst housing bubble and the international
credit crunch. Others, like Dr.
Gabriel Calzada Álvarez, an economics professor
at the Universidad Rey Juan Carlos in
Madrid, point to the government's substantial
subsidies for the country's inflated renewable
energy sector, which Álvarez has said created
30
large debt bubbles and artificially created
a new market that would collapse without
more public funding.
In a much-cited, controversial March 2009
report on the effects that renewable subsidies
have on employment, Álvarez contends that
between 2000 and 2008, Spain's government
spent more than $36 billion to subsidize renewable
projects, while consumers paid almost $10
billion more for renewable power than set market
cost. Álvarez also suggests that the resulting
higher energy costs and " green " jobs may have
more than doubled job losses economy-wide.
Critics of the report say his analysis was " too
simplistic " to be applied as a real-world model
and that he deviated from peer-reviewed methodologies
to estimate job impacts.
Creating a " Sustained " Renewable
Policy Framework
In 1980, Spain's social-democratic Socialist
Workers Party enacted a law after the second
international oil crisis to support what they
called a " sustained " framework for the development
of renewable energy. In 1997 another
law was ratified that deregulated the power
market while mandating that 12% of primary
energy demand was to be met with renewable
sources by 2010. By 2005, when it became
apparent that objective would be difficult
to achieve, the government approved a new
Renewable Energies Plan calling for 29.4%
of gross electricity demand to be covered by
renewable sources by 2010.
To support sales of renewable power, the
government put in place a feed-in tariff system,
establishing fixed tariffs to be paid on
top of market prices for renewable power installations.
(See " The Feed-in Tariff Factor "
in our Sept. 2010 issue or in the archives at
www.powermag.com.) Later, in June 2009,
a directive based on targets set by the EU
called for 20% of final gross energy demand
to be met with renewables (and for cutting
greenhouse gas emissions by 20% compared
with 1990 levels).
The mandates have transformed Spain's
generation mix. Compared with the 1990s,
when coal, hydro, oil, and nuclear facilities
www.powermag.com
1. Spain's electricity profile. Installed
power capacity in Spain's electricity system in
2010 amounted to 103,086 MW. Power actually
generated totaled 275,252 GWh, including
reductions for self-consumption, pumped storage
consumption, and international exchanges.
" Factoring in the effects of seasonal and working
patterns, the annual [demand] growth was
2.9%, compared to a fall of 4.8% registered in
2009, " grid operator Red Electrica de Espana
(REE) said in its annual report. Source: REE
Solar 2%
Gas 3%
Coal
9%
Hydro
13%
Other
renewables
14%
Wind 15%
Note: Total does not include 7,555 GWh used for selfconsumption.
" Gas " includes power generated by integrated
gasification combined-cycle, conventional gas,
combined-cycle gas turbines, and oil/diesel generation.
Power generated, 2010
Solar 4%
Gas 6%
Nuclear
7%
Other
renewables
10%
Coal
12%
Hydro
16%
Installed capacity, 2010
POWER | June 2011
Wind 19%
Combined
cycle 26%
Nuclear
21%
Combined
cycle 23%
http://www.powermag.com http://www.powermag.com
POWER June 2011

Table of Contents for the Digital Edition of POWER June 2011
