The solar robber barons

Spain’s move to subsidize solar proved utterly unsustainable
by Peter Foster   Financial Post
Some foreign — and even domestic — solar equipment manufacturers are complaining that Ontario’s buy-local policies will cost investment and jobs. It takes some gall to criticize dumb and damaging initiatives when your existence depends on them.

A group of photovoltaic producers — led by Japan’s Mitsubishi Electric Corp. — is complaining that to receive Ontario’s super-premium rates for solar energy, projects must have a 60% local content. This, bleat the solar robber barons, is bad for the economy!

Worldwide, solar companies have been boosted by the policy pandemic of feed-in tariffs, whereby the high costs of uneconomic renewable power are averaged down with much cheaper conventional electricity sources. This is leading to sharp cost increases for consumers.

Takashi Sato, president of Mitsubishi Electric Sales Canada, was reported as saying this week that “We are very encouraged by the FIT [feed-in-tariff] as far as a tariff program is concerned.”

You bet they are! Who wouldn’t want their industry subsidized by having consumers forced to pay multiples of the market price for a portion of their purchases?

“However,” continued Mr. Sato, “the program contains some poison because of the domestic content requirement.”

We beg to differ. The program is pure hemlock all the way through.

Japan has challenged Ontario’s Green Energy Act at the WTO, with the EU and United States cheering it on, but this is sheer hypocrisy, even if the Ontario government’s actions are indefensible (It remains to be seen whether Dalton McGuinty plans to go the Danny Williams route of flouting trade agreements in the knowledge that Ottawa has to pick up the bill).

The U.S. is complaining about China’s renewable industry subsidies, but China has fired back noting that a $60-billion-plus chunk of Mr. Obama’s stimulus package consisted of such subsidies, with “Buy American” clauses attached.

“What America is blaming us for is exactly what they do themselves,” said Mr. Zhang Guobao, vice-chairman of China’s National Development and Reform Commission. “Chinese subsidies to new energy companies are much smaller than those of the U.S. government. If the U.S. government can subsidize companies, then why can’t we?”

Well of course they can. The problem is that such actions are collectively suicidal.

When launching his own campaign of hypocrisy in Ontario, Mitsubishi’s Mr. Sato claimed that the solar industry was set to boom. Au contraire. The solar industry is headed for a crash, and any superficial buoyancy is not due to bright market prospects but to frenzied activity in anticipation of subsidy withdrawal. As usual, Icarus McGuinty appears a little slow on the uptake, still convinced he can bear the Ontario economy Sol-wards on waxy wings.

Spain had a similarly crazy policy that subsidized farmers to plough their orchards under and cover them with solar panels. Supposedly shrewd men of the soil invested to take advantage of a solar tariff of around 44¢ per kilowatt-hour, 10 times that paid to mainstream suppliers (but still way short of Ontario’s top rates of over 70¢).

When he unveiled a solar plant in 2007, Spanish Prime Minister Jose Luis Rodriguez Zapatero declared, “We are a world power in this field, we are capable of exporting our technology and competing across five continents and we are today at the forefront of the renewable-energy industry.”

When Mr. Zapatero took a delegation to Washington a year ago, President Obama (who is to put more solar panels on the White House, just like Jimmy Carter) praised Spain as a model of green-energy-driven economic transformation.

It certainly is: the transformation to ruin.

Typical of such bold moves toward “sustainability,” Spain’s proved utterly unsustainable. Soon Madrid found itself saddled with upward of €126-billion of solar obligations. Investors wound up importing most solar equipment because domestic suppliers couldn’t meet the surge in demand. Studies indicated that each renewable job cost two regular jobs.

Spain, like most countries, has found itself with a surging deficit in the wake of the economic crisis. This in turn has forced it to renege on its commitments to high solar power prices. The response has been outrage from the solar industry, a slump in investment and a sharp drop in the price of solar panels. Critics point out that these government’s policy lurchings have damaged the investment climate more generally.

Anybody with half an economic brain could have seen that the universal policy urge to subsidize green energy was going to lead to both massive oversupply and unsustainable drainage of the public purse. Meanwhile we should remember that the whole green energy thrust is likely based on scientific sand.

As Czech President Vaclav Klaus pointed out in a speech this week to the Global Warming Policy Foundation (which was excerpted on this page yesterday), climate change is far more about political power and rent-seeking than science. The solar fiasco shows that this thrust is not merely dangerous to freedom, as President Klaus indicated, it is also fiscally suicidal.

Back in Ontario, meanwhile, Mr. Sato’s arm-twisting kicker is that unless foreign solar manufacturers get their full section of the subsidy trough, they may have to uproot and head for, well, even more stupid jurisdictions. That means Ontario might not be able to reach its renewable targets! We can only hope so.

Farewell, Mr. Sato. Don’t forget to send a postcard.

7 thoughts on “The solar robber barons

  1. “head for, well, even more stupid jurisdictions”

    I didn’t think that was possible, but then, our politicians are still clinging to the “green” in spite of the mega-tsunami of truth and reality bearing down upon them. A better example of “even more stupid” likely doesn’t exist.

    Revolution approaches! Time to dust off and sharpen up those guillotines!

    Unlikely but perhaps we the victims of this absolute absurdity can take comfort from the image.

    Sean Holt.

  2. Remember Dr. Calzeda? He said the way Spain would make money would be to export their technology.

    *********************************
    Spain’s Siliken to open solar plant in Ontario

    OTTAWA | Fri Oct 8, 2010 2:40pm EDT

    OTTAWA (Reuters) – Spanish solar equipment maker Siliken S.A. said on Friday it will open a manufacturing plant in Windsor, Ontario, to capitalize on an Ontario provincial government program that pays high rates for green energy but requires local content in installations
    *****************************************

    Maybe he was onta somethin’ — ya know?
    http://www.reuters.com/article/idUSTRE6974RX20101008

    Maybe they will take up residence in the Green Fairy Park er I mean Technology!

  3. Dr. Calzeda… There may really be something to his Oracle Like powers of prediction… He says it was simple economics and math. DO you think he could be right?

    ***********************
    Stark Lesson

    Spain stands as a lesson to other aspiring green-energy nations, including China and the U.S., by showing how difficult it is to build an alternative energy industry even with billions of euros in subsidies, says Ramon de la Sota, a private investor in Spanish photovoltaic panels and a former General Electric Co. executive.

    “The government totally overshot with the tariff,” de la Sota says. “Now they have a huge bill to pay — but where’s the technology, where’s the know-how, where’s the value?”

    *******************************

    http://www.bloomberg.com/news/2010-10-19/spanish-sunburn.html

    But == Dr. Calzeda has been de-funded and demoted and harassed. I wonder why? Lack of loyalty? Truth-telling?

    We are going to stick our hand on the burner to see if red really means hot. It does seem silly — doesn’t it?

    Dr. Clazeda warned us that Wind Power wasn’t worth the effort, he said the subsidies for solar power were too high. This was BEFORE the GEA was enacted.

    Do you think that our then energy minster Smitherman got it all wrong? Do you think that McGuinty did not have a clue? How about the clueless partly educated people at Pembina? What did they miss?

    Now we could end up with Smitherman as Mayor of Toronto promoting green dreams fantasies and visions of a carbon free world — all when they have no idea that CO2 is just plant food.

    Shocking? Astounding? Foolish? Yes! perhaps even criminal neglect…

    Is there no mechanism to impeach these fools?

  4. “Anybody with half an economic brain could have seen that the universal policy urge to subsidize green energy was going to lead to both massive oversupply and unsustainable drainage of the public purse. Meanwhile we should remember that the whole green energy thrust is likely based on scientific sand.” Less than half an economic brain is necessary to figure this out and at what point in time will the obvious brainless figure out that “green fairies” just like “tooth fairies” don’t exist. At least kids have an excuse for not knowing who pays out.

  5. Nice future for our children and grand children eh?…………..Anyone who embraces this Green Scam should hang their heads in absolute SHAME!

    This statement is aimed at “Green NGO’s” across the world!!!!!!!!!!

  6. These eco-nuts must have attended ECO-NUT UNIVERSITY where the basic sciences are no longer taught and haven’t been taught for years!!!

  7. ECO-NUT University? Would that be York?

    In all fairness the universities all seem to be developing Ecology departments.

    Eco-nuts, wing nuts, just plain nuts… they all seem to be peddling the same tripe.

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