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Santander and BP Solar Partner in Major Euro Photovoltaic Project

Map of yearly total solar radiation in Europe. Source: PVGIS

Santander, a leading European and Latin American banking group, and BP Solar are developing the largest project for the investment in photovoltaic solar energy yet in Europe. The project will deploy up to 278 photovoltaic solar energy facilities in Spain with a total aggregate capacity ranging between 18 and 25 MW. This represents twice Spain’s current photovoltaic solar energy capacity, according to the companies.

The construction of the solar plants, which will begin next May, is scheduled to be completed in December 2007 and will require an investment of up to €160 million (US$198 million). Each of the plants will have a capacity of between 90 and 100 kW.

BP Solar will be in charge of building the facilities, by means of turnkey contracts covering the entire process, from the production of solar panels at its factories to the installation and maintenance of those plants.

Santander will incorporate and finance the companies owning the various photovoltaic solar energy production plants. The shareholders of each of these companies will consist entirely of private Investors who have already conveyed to Santander Private Banking their interest in taking part in projects for the investment in renewable energy sources.

The plants will sell the power they produce to the nearest electric power distribution companies, at the prices set by the Spanish government in 2004 in Royal Decree 436/2004. Royal Decree 436/2004 promotes the use of photovoltaic solar energy by establishing a rate that is 575% the Average Reference Rate, guaranteed during 25 years.

The 2005-2010 Renewable Energy Plan (PER in the Spanish acronym), passed in August 2005 by the Spanish Council of Ministers, aims to cover 12% of Spain’s power consumption with renewable energy sources in 2010. This Plan has set a target of 400 MW of installed photovoltaic solar energy capacity.

Spain enjoys the highest number of hours of sunlight in Europe, making it a good prospect for solar energy. BP Solar has its European headquarters in Tres Cantos (Madrid). Spain is the world’s fourth largest manufacturer of technologies for the production of solar energy and it exports 80% of this production to Germany.

Spain has also seen its greenhouse gas emissions rise 48% from 1990 to 2004, climbing from 289.4 million metric tons CO2 equivalent to 428 million metric tons, according to a report produced by the Environment Ministry that will be sent to the European Commission. Greenhouse gas emissions rose 4.8% from 2003 to 2004. (Earlier post.)



so spain will effectively transfer cash from the gov't to investors under the pretext of renewable energy?

how long will it take for this to become a scandal, dragging the reputation of solar power through the dust (too dry in Spain for mud)?

if the gov't is interested in renewable energy, they may be better off directly funding and building projects or supporting research instead of creating the possiblity of such a scandal.


Don't forget:

The rain in Spain falls mostly on the plain.


Generating investor interest by promising a fixed and sufficient price for renewable power is a scandal? If so, it is a peculiar sort of scandal, with all its provisions mapped out ahead of time, in a royal decree promulgated two years ago, for the public to study and comment on at our leisure. Indeed, the usual hallmarks of scandal are secrecy and a violation of the established laws and edicts, which are notably absent here.

What's the alternative? Have government build the plants directly? As if government procurement procedures are any less corrupt or more transparent than announcing a bounty ahead of time and letting market players step up to the plate in order to collect that bounty.

It is an article of faith for some, and an empirically supported idea for others, that government agencies -- typically mired in graft and infighting -- tend to do a worse job of bringing complex new technologies to market, relative to the private sector.

Solar power is fairly pricey relative to conventional power, but more importantly, it is risky, because there are very few commercial-scale implementations of it to date, and the inevitable kinks have yet to be ironed out. By placing a set bounty on renewable power, the government generates significant interest among private players, who have a great incentive to study the risks and practicalities of a project in great detail and move ahead when everything lines up properly. If government were simply to command renewable energy projects from the top down, there would be few incentives to actually build the most cost effective solution, and high incentives for politicians representing local constituencies to lobby for pork and public spending in their local areas, notwithstanding actual utility of the spending.

Certain government problems might be peculiar to the American system, or exacerbated by it, and apply less strongly to the sitation in Spain. But so long as our societies remain wedded to a capitalist or market system (for where there are good reasons), setting broad-range goals and incentives is probably the best way for government to advance needed social and environmental agendas. It usually beats micromanaging.

Rafael Seidl

Shaun - it's quite common for governments to provide financial incentives of one sort or another to privately held businesses to encourage the development and deployment of new technologies that look promising wrt political goals. At 6x the cost of electricity from fossil fuels, photovoltaics are very expensive but I fail to see a scandal.

Moreover, Europe needs to get its farmers to rethink their land use, because food crop subsidies (budget total of EUR400 billion for 2007-2013 in the EU25) are heavily distorting local and world markets. Biofuel feedstocks and photovoltaic parks are obvious alternatives. That said, even though Spain gets a lot of sunshine, photovoltaic power still needs to be buffered at low cost (e.g. in existing, already amortized hydroelectric dams, underground thermal or pressure reservoirs) to become economically competitive in the long run.

gerald earl

Im sorry nbk but you misspelled situation therefore your entire piece is worthless.{thats a joke}I agree with your piece and just wanted to use that joke as an example of nitpicking a good news story.Evil oil bp is spending large amounts of money in alternative tech.As is shell oil.They see the writing on the wall and want to be part of the future evil solar industry.Ge is plowing funds into turbine production for windmills.Kleiner perkins is investing in eestore battery capacitor tech.I think goernment pump priming has led to market investment which will become a force multiplier.Believe it or not good things are starting to happen.

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