Saturday, January 24, 2009

THEY NEVER SEEM TO LEARN that government intervention, even in the cases where it looks like a good idea, most of the times ends up creating the wrong result. To wit:
At the beginning of 2008, the government of Spain (a very sunny
country) created a year-long law that required power utilities to buy
solar power at premium rates. This made solar power competitive with
all other sorts of power...but only for one year.

The result was an enormous explosion in installed solar capacity,
over 3 gigawatts in one year, enough to displace up to five coal-fired
power plants. This number was far higher than analysts had predicted,
but it comes at a significant cost, and not just to people's
electricity bills.

Now that the subsidy is being rolled-back, the artificially inflated
solar market in Spain is reeling. Oversupplies of panels are driving
prices unprofitably low and installers are scrambling for work. Worse,
many installations are lying about whether they were finished by the
subsidy's deadline, effectively attempting to defraud the government.