Spain's solar betrayal

A proposal by Spain to make consumers pay for the clean power they generate and use themselves has roiled the industry. The draft bill is currently being reviewed by the country’s energy regulator CNE, which accepted feedback until July 30.

The unprecedented move will make self-generated solar power dearer than electricity from the grid. “The decree is an attack to market freedom that aims to prevent people from competing with established utilities. It’s like if they charged you when you turn off electric heaters and use a wood stove,” said Jose Donoso, managing director of Spain’s solar lobby group UNEF.

The new fee applies to all plants of 100 kW or less. Domestic installations with less than 10kW would have to pay 27 per cent more, according to the lobby group. Payback time for domestic solar systems would be extended to almost 35 years from about 12 years currently, it estimates.

Spain had moved down the list of clean energy investor preferences when it decided to implement retroactive tariff cuts in 2011, and ended fixed subsidies for new projects in 2012. This latest move – mainly aimed at controlling the growth of rooftop solar plants – will push it a few notches lower. The government, however, insists that Spain already has too much generation, since total capacity exceeds peak demand by 60 per cent.

In Asia, the world's largest producer of solar panels, China, announced that its spend on clean energy may total 1.8 trillion yuan ($A315 billion) in the five years through 2015. The world's most populous country aims to have 100GW of wind power and more than 35GW of solar installed by 2015, Xie Zhenhua, vice-chairman of the National Development and Reform Commission reiterated at a conference in Beijing last week. The country will also gradually expand the regions falling under its carbon trading pilot scheme, he further said.

Meanwhile, two international companies announced sales into China last week. BrightSource Energy, the US solar-thermal developer, agreed to supply its technology to China Power Investment Corp and China Renewable Engineering Institute to be used in a commercial-scale power plant.

Also, German manufacturing-equipment maker Manz received its first order from a Chinese customer for machines to produce organic light emitting diode (OLED) displays. The €9 million contract offers "considerable revenue potential" because of growth in the displays' use in smartphones and tablet-computer touchscreens, the company said in a statement, without identifying the buyer.

Coming back to the oversupplied solar industry, global sales of PV products and shipments increased in June, and prices showed an upward trend, according to Bloomberg New Energy Finance’s Solar Shipments Index, based on a survey of leading manufacturers in the PV supply chain. This was driven by a booming Japanese market – expected to end the year with 6.8-9.4GW of new PV installations – and the rush to beat the imposition of anti-dumping tariffs by the European Union on Chinese products, which were to come into effect on August 6. China agreed to adhere to a minimum export price and a maximum export quantity, thus avoiding the imposition of punitive tariffs.

The BNEF Solar Spot Price Index showed average polysilicon prices to have risen to just over $US17/kg, from $US16/kg in December 2012. Module prices also rose, with Chinese modules from reputable suppliers commanding $US0.75/W, and international modules $US0.86/W. Market participants surveyed expect prices to stabilise from now on.

“These data show that there is strong global demand for the PV products of the largest manufacturers, despite uncertainty and the flow of bad news from the global solar market. Consolidation continues, but 2013 will still be a year of growth for the industry as a whole,” said Jenny Chase, head of solar analysis at Bloomberg New Energy Finance. The global PV market is expected to total 37GW in 2013, compared to 30.5GW in 2012.

It was not surprising, therefore, to see SunPower, the second largest US solar manufacturer, report a profit in the quarter ending June. The company had not reported a profit since the fourth quarter of 2010. Last week, the company reported a net income of $US19.6 million compared with a net loss of $84.2 million in the same period a year earlier.

In contrast, India’s Suzlon Energy reported a wider quarterly loss of $US173.5 million due to costs incurred on scaling back wind-turbine manufacturing at its unit in Germany, and the depreciation of the rupee, making it this year's worst-performing stock in the WilderHill New Energy Global Innovation Index or NEX, which tracks 98 clean energy companies.

EU carbon

European Union allowances (EUAs) traded in a narrow range for most of last week amid declining auction volumes. EUAs for December 2013 gained 3.3 per cent over the week to close at €4.40/t on ICE Futures Europe exchange in London, compared with €4.19/t at the end of the previous week.

Last Tuesday, the European Commission announced that the decision on free allocation will happen in September, but that did little to move the market. Certified Emission Reductions (CERs) for December 2013 gained 3.5 per cent last week to close at €0.59/t, as a total of 3.3Mt changed hands on ICE, close to the 15-week moving average of 3.5Mt.

Trades in United Nations Emission Reduction Units (ERUs) on ICE increased to 2.1Mt last week, substantially above the 15-week moving average of 1.3Mt. ERUs finished the week at €0.39/t, up from €0.32/t. 

This article was originally published by Bloomberg New Energy Finance.