Sunday, February 17, 2013

Cutbacks to existing contracts rattle Europe's renewables proponents

There have been a number of stories over the past couple of weeks on changes to wind and solar payments on existing contracts.

Germany is attempting to control electricity costs after it's EEG, considered a renewables' surcharge, jumped to over 5 euro cents/kWh in this, a German election, year.  This despite the relatively small contribution of wind (8%) and solar (5%) to total 2012 electricity generation in Germany (bdew figures).
The German Energy Blog explains proposed changes to the EEG, with perhaps the biggest surprise being a straight 1.5% cut in payments on existing contracts.  German Renewables groups proposed alternatives (Bloomberg) essentially to stop excluding industry from paying for renewables (industry has benefitted from falling market rates as costs were increasingly transferred from market pricing to the feed-in tariff's fixed rates), and the government cutting back on it's tax haul.
Regardless of the choices in controlling consumer cost, it's a lot of effort for 13% of supply.

Spain gets far more than 13% of it's supply from renewables - the Canadian Broadcast Corporation noted wind producting 25% of Spain's electricity in January.  Spain celebrated with another round of actions (details at Lexology) to curtail a massive $28 million euro tariff deficit, growing at ~5 billion euro dollars a year,
The cuts, expected to save ~1 billion euros a year - keeping in mind the deficit is ~5 billion - have foreign "investors" feeling litigous, according to Reuters

Unlike the record wind production in January, the cutbacks mainly got noticed on investor sites:'s headline read "Reforms in the Spanish electricity sector will hurt wind power developers", which seems a suitable, if rare, occurance as they are the parties that benefitted in accumulating a $28 billion euro tariff deficit; also reported on the actions with Germany, Spain Set To Pull The Plug On Green Energy:

Naturally the response from the subsidized industries has been swift and damning:
Renewable-energy companies said that the government was backing away from previous promises that it would ensure them a reasonable return on their investments.

"Spain's government is trying to smash the renewable-energy sector through legislative modifications," said José Miguel Villarig, chairman of the country´s Association of Renewable-Energy Producers. 
Actually all the Spanish government is thing to do is stay in power, and in order to do so, it must stop demanding that its people pay for the development of financial black hole industries.
The immediate result of these steps will be a widespread collapse in the alternative energy space in Europe, which is barely sustainable on an "as is" basis (see Solyndra) with ongoing government funding, and will melt as fast as a snowball in the Iceland thermal when the money is even modestly cut off.

The state with the most wind capacity is Texas, where the mood is not shown as positive for renewables in Kate Galbraith's Texas' wind industry battens down:
...renewable energy advocates are bracing to defend critical policies that have helped Texas become the leading wind-power state. The ascendancy of the Tea Party, an abundance of cheap natural gas and tighter budgets have reduced the sway of the wind industry. Solar power advocates anticipate limited gains at best.
Clean energy basked in political popularity about a decade ago, as wind farms sprouted atop West Texas mesas. In 2005, Gov. Rick Perry and lawmakers approved a mandate to build 5,880 megawatts of renewable power capacity by 2015. They also backed the construction of billions of dollars' worth of transmission lines to reach wind farms.
Caution about renewables is not universal - it seems almost absent in New York, if the New York Times' "Could Wind Power Cool New England's Price Fever?" is indicative:
At the Union of Concerned Scientists, the senior energy analyst Michael B. Jacobs, who has a blog called the Energy Roller Coaster, has been sounding the alarm about over-reliance on natural gas in New England and Texas. The solution, he said, would be to turn to more renewable energy sources like wind so that the demand for gas would be smaller at clinch times.
“You don’t have nearly so much of a price spike if you have more renewables in your portfolio,’’ he said.
A look at Texas, or Germany, or Spain, would expose the multiple mythologies presented by this scientist that is concerned - if not so concerned as to do research.

1 comment:

  1. "Renewable" energy generation has become the world's largest SCAM ever perpetrated on the citizens in modern times.........the renewable energy sector is nothing more than another CRIMINAL element robbing us of our hard earned dollars!!!'s that simple!