Spain expects 3,000 MW in solar plants by 2010

Thomson Financial News Super Focus, September 25, 2008 Thursday 12:56 PM GMT - Spain's government said its new and less generous subsidy scheme, due to take effect shortly, foresees solar power plants reaching a capacity of 3,000 megawatts by 2010, or about double the present total.

Industry Minister Miguel Sebastian added, in testimony to the Senate on Thursday, that the government expected the capacity of solar panels to expand to 10,000 MW by 2020.

Spain is one of the world's hottest markets for solar panels and Sebastian said he expected capacity by the end of this year to be five times a target of 371 MW that the government had originally set for 2010 in a renewable energy plan.

Encouraged by generous subsidies designed to make solar power gradually become competitive, installed capacity for photovoltaic panels in Spain has jumped to about 1,500 MW from 470 MW at the end of last year.

This makes Spain the world's third biggest market, after Germany and the United States.

But the government views this growth as unsustainable and costly so it proposes to cut the limit on new plants eligible for subsidies next year to 500 MW, from a current cap of 1,200.

Under the latest proposals, the direct subsidies will themselves be cut from 0.45 euros per kilowatt-hour to 0.33 euros ($0.486) for roof-mounted panels, and 0.29 for ground-based plants.

Sebastian said the new subsidies would still be at least 25 percent above the highest rate recently set in Germany, which receives 20 percent less sunlight than Spain.

Friday is the last day on which Spain's cabinet can approve the new subsidies before the existing framework expires on Sept. 29.

The government has relented on original proposals to cut the subsidy cap to 300 MW, after shares of solar panel makers fell and industry groups protested that many firms could go out of business.