Renewable Energy perils in Spain and Italy
The regulatory programs of renewable energy in Spain and Italy are said to imply efficiency risks for further development, according to Moody's Investors Service.
Report on renewable energy regulation by Moody's
On 5 October Moody's published their financial report concerning the renewable energy regulatory frameworks among EU member states. According to it, the best future prospects in this field have the United Kingdom, Germany and France with relatively productive regulatory policies, while Spain and Italy got quite low estimates for future. There are several reasons for such a situation in both countries: limited production hours that qualify for subsidies, new energy taxation systems and removal of favorable tax incentives etc.
Renewable energy promotion in Spain
In Spain the regulation of renewable energy development is carried out mostly with the help of price regulation systems. There are two options for operator to choose between. The first one is represented with feed-in tariff and the second consists in guaranteed bonus paid when the electricity prices reach those on the wholesome markets. However, recently this scheme was partially phased out, especially what deals with solar energy.
Spain has a large potential of solar energy development due to its climate. So it seems quite reasonable to encourage solar energy development both for industrial and private energy consumption. Still there are several factors, which impede further development of solar sector. The first to mention in this context is the fact that high consumption of solar electricity by private households reduces the share of electricity, provided by utility companies, which means lower profits for them. As soon as using of the grid energy is less efficient than self-generated energy, the existence of utility companies will be questioned. In order to uphold the utilities. Scaling down of solar energy prices worldwide suggests that this electricity source will be cheaper then grid electricity in five years. Thus, Spanish government put a tax on solar energy consumption, which is aimed at artificial increasing of the solar electricity prices. However, the government lowered the initiatory tax levels and exempted from the tax those, who produce up to 10 kilowatts. Bur they still are to pay a toll to cover maintenance of the grid systems and other expenses faced by Spanish electricity enterprises. "Strange things are happening in Spain and this is one of them" – said Jaume Serrasolses, the secretary of an association promoting the use of solar energy, SEBA, emphasizing that Spain is going to be the only country in the world to charge for the use of solar energy. Few people are happy with the new tax, as they may suffer sustainable losses, firstly having invested a lot of money in solar system installation and instead of getting cheap electricity they are to pay taxes. Moddy's Vice President and leading author of the RES regulatory policies Christopher Bredholt called this decision of Spanish government "a politically unpalatable option in a time of high unemployment".
Another problem with solar energy in Spain deals with the time, when the most of electricity is provided, and time, when it is used. The point is that people tend to use more electricity at night time, so for the efficient energy usage, the electricity is to be accumulated. Such systems are successfully operated in Germany, Denmark, Greece, and the United States and are required to be installed for Spanish solar systems. But after solar energy taxation this measures are seem to be loss-making.
Such a tendency in solar energy regulation suggests that Spain isn't interested in its promoting anymore. According to some statistics as of 2014 Spain hasn't boosted its solar energy production at all, compared to previous years. The same concerns wind power.
Renewable energy decline in Italy
Italy possesses the second largest solar energy capacity per capita in the world after only Germany. Taking into account the megawatts installed, the Italians came fourth just after three much bigger countries: Germany, China and Japan. It also has great potential for wind power development. The combined share of PV and wind power was around 25 percent in 2013. But recently the advancement in both these directions has suddenly stopped. The country has solar facilities of around 18 GW but the previous year it has added only 0.4 GW. On terms of wind power, Italy just let it decay without necessary renewal.
The situations, that made Spanish and Italian regulatory frameworks for renewable energy unattractive for investments are quite different, but they both have something to do with small demand. As the countries reached a very high renewable energy share of about a quarter of their total consumption they confronted the problem of supply exceeding the demand. The states are to develop new efficient programs for further development of solar and wind power, aside of the incentives halting and taxation, as these measures seem to be devastating for the renewable energy in the long-run.
Reference information
Moody's Investors Service is one of the largest credit rating and financial services provider in the world. It was founded in 1909 by John Moody, headquartered in New York City.
