Spain’s wind turbine manufacturers are laying off workers and farmers who installed solar panels face ruin as austerity policies afflict the long-coddled green energy sector.
State subsidies to clean energy producers have fallen by between 12 percent and 40 percent on average in recent years, industry analysts say. They could fall by another 10 percent to 20 percent in a new energy sector reform expected next month, according to Spanish media.
“The punishment meted out to renewable energies in the past five years amounts to more than 6 billion euros [US$8 billion],” said Sergio Otto, secretary general of the business group Renewables Foundation.
“In the wind turbine industry alone we have lost 20,000 jobs and in the solar energy sector it’s probably more,” he said.
At the heart of the problem is a deficit of more than 26 billion euros in Spain’s energy market, built up by subsidies to cover the gap between the cost of producing electricity and prices for consumers.
“We are still singling out renewable energies as the main guilty parties for this deficit,” Otto said.
In the middle of the last decade when the economy was enjoying strong growth, Spain put a cap on the price of green energies and provided “fairly generous” subsidies, said Carlos Garcia Suarez, expert in the sector at the IE Business School.
This boosted the appetite of investors leading to a “boom” in wind and solar energies, Suarez said.
“Not only have the subsidies come down, but new projects have been explicitly banned, which is pretty unusual,” he said.
The retroactive nature of some cuts even threw into question Spain’s reliability for investors, Suarez said. Indeed, several investment funds that bet on the sector are taking Spain to international arbitration.
There is “political pressure,” too, from the US where some of the funds are based and the Spanish government is uncertain how to resolve the matter, he said.
“We gave excessive subsidies,” said Rodrigo Izurzun, energy specialist at Ecologists in Action. “The current policy is harmful because the sector was maturing and close to becoming competitive without any aid, but has suddenly totally collapsed.”
Investors in wind turbines no longer believe the outlook is attractive, said Heikki Willstedt Mesa, director of energy policy at the wind turbine association AEE.
“We have sued in the Spanish courts,” said Miguel Angel Martinez-Aroca, president of Anpier, which groups Spanish solar energy producers.
The sector is “barely surviving after so many cuts,” he said.
His association has launched a campaign to highlight the victims of the new austerity: people who put their savings into solar panels counting on the subsidies to make them profitable and, for example, to help finance their retirement.
“There are 55,000 individuals, small savers, many farmers and breeders, professionals, families and small businesses who simply believed what the state told them, which was to invest in solar energy,” Martinez-Aroca said.
“Then we were ruined,” he said, denouncing a “swindle and deception by the state” which slashed payments for such panels.
The consequences are far reaching.
“The solar energy sector’s debt to banks is now 20 billion euros,” Martinez-Aroca said.
Spain’s banks are in no state to withstand the blow; they have already had to take more than 41 billion euros from a European credit line to recapitalize balance sheets laden with bad loans since a 2008 property market crash.