Spain is one of the leading countries in Europe for Renewables. In 2013 output broke new records, with renewables accounting for 21.1% of Spanish electricity demand, with wind and hydroelectric power production increasing by 12% and 16%, respectively on 2012.
This is to the detriment of the Spanish economy for three financial reasons.
First is the huge amount now likely being spent on wind power subsidies. In 2013 output from wind farms was about 54GWh, or 12% higher than the 48.5GWh produced in 2012. Assuming an average subsidy of €54MWh (the rate for onshore wind turbines in the UK) that would be €2.9billion in subsidies.
Second, there is the huge amount now likely being spent on solar power. Spain is home to the massive Anadasol Solar Power Station. The three sections are expected to produce 495GWh per year, which at 38% of capacity seems a tad high. This will have a guaranteed price of €270 per megawatt. In the UK, the wholesale price is about £45 or €60 a megawatt. The excess cost (or subsidy) is therefore €210MWh, or €100million a year. At this rate, the total 8.2GWh produced by photovoltaics would have attracted a subsidy of €1.7bn in subsidies.
The combined estimated subsidy is worth €4.6bn is equivalent to 0.3% of GDP. Total subsidies are likely to be much more.
Third is the disastrous foray in solar panels lead to huge amounts of investments in solar schemes. In 2008 there were an estimated 30,000 jobs supported in the boom years. These jobs disappeared with the bust. With this sudden boom, caused by extremely generous subsidies, the quality of the panels was poor and overpriced. Many investors would not have got their money back even if the subsidies had remained. Now they will be saddled in debt, with no income. These borrowing were often state-backed. According to Bloomberg this fund was €24bn at the end of 2011. If some of this has to be written off, then there could be a material impact on deficit reduction plans, and thus the levels of unemployment. Government backing loss-making projects costs jobs.
This claim can be cross-checked. In the same Bloomberg article the Renewable Energy Producers Association (Asociación de productores de energías renovables or APPA) was quoted as saying that the renewables industry sustains about 110,000 Spanish jobs. In 2011 Verso Economics, a Kirkcaldy-based outfit, wrote a report about the effect of renewables jobs in Scotland and the impact on the wider UK. Whilst the report found that the jobs in renewables were largely neutral with Scotland – one job lost in the wider economy for each gained in renewables – in the wider UK economy for each job gained in Scottish renewables 3.7 jobs were lost in the wider UK economy. (report here, and reported at Caledonian Mercury, BBC and Scottish Sceptic) If this were replicated in Spain, the net impact of 110,000 jobs in renewables would be 400,000 jobs less jobs in the wider Spanish economy. Without renewables more than 250,000 people could be in work, or over 1% of the labor force.
Why I call Spain’s attempt to save the planet a folly, are the same reasons for calling Britain’s attempts a folly. Any emissions reductions in Europe will be more than offset by many times over from the emerging economies elsewhere. In reducing emissions, Spain will increase unemployment and reduce growth. But future generations will still bear over 80% of any consequences of warming than if no rich country did anything. In the current situation, I believe that a lot of Spanish people might object to their country being called “rich” anyway.
Update 20/11/14 – minor editing.