Are solar subsidies a good idea?
DOI: 10.1063/PT.4.0955
An article in the New York Times highlights the advantages and dangers of relying on government intervention, particularly subsidies, to support emerging energy technologies.
Elisabeth Rosenthal surveys Puertollano , a mining town in the middle of Spain that took advantage of generous incentives from the Spanish government to jump-start the solar energy industry.
The subsidies led to construction of two enormous solar power plants, factories making solar panels and silicon wafers, and clean energy research institutes. But as Rosenthal reports:
Farmers sold land for solar plants...But as low-quality, poorly designed solar plants sprang up on Spain’s plateaus, Spanish officials came to realize that they would have to subsidize many of them indefinitely, and that the industry they had created might never produce efficient green energy on its own.
In September the government abruptly changed course, cutting payments and capping solar construction. Puertollano’s brief boom turned bust. Factories and stores shut, thousands of workers lost jobs, foreign companies and banks abandoned contracts that had already been negotiated.
The story isn’t as bleak as the opening paragraphs suggest, for half the solar power installed globally in 2008 was installed in Spain, and unemployment in Puertollano, though now around 10%, is half what it was before the solar industry moved into the city. Moreover, the plants acted as a magnet, attracting more high-tech industry to the area.
In fact, adaption is at the heart of the story, for as the Spanish subsidies disappeared, the solar power industry switched from the domestic to the export market—Denmark, Germany, and elsewhere—to turn what were losses into profit.
Paul Guinnessy
More about the authors
Paul Guinnessy, pguinnes@aip.org
