It has been
a while since we have played “Are They Smarter Than a Garden Gnome?” Our blog
today involves a near-bankrupt government, which pressed the metal to the floor
with “renewable energy” and “green” subsidies. It has now taken the preposterous
– and possibly first-time-in-human-history- act of taxing the sun.
You think I
am kidding. You may also think I am talking about the United States, but I am
not. At least, not this time.
We are talking
about Spain, one of the sunniest places in all of Europe. It is a likely
candidate for photovoltaic and solar-thermal power generation – that is, solar
panels. It sounds good on first hearing. That of course is before the
government got involved.
In 2007
Spain had 701 megawatts of installed solar panels. I do not know if that is a
lot, but I do know that the Spanish government wanted to increase the amount.
Not having a Solyndra or Satcon Technology on which to throw away tax money,
they decided to push solar power. That
meant that they paid more for solar-produced power than for other power – think
coal, hydroelectric, nuclear, air draft from flocks of geese. How much more?
Think 12 times more than conventional power. Yipes! The government was
unwilling to pass the full cost onto the populace, even though Spanish power
producers have some of the highest rates in the EU. The government instead ran
up subsidy deficits now totaling 26 billion euros.
Well, they did
increase solar power generation. Current production is 4,000MW, which is an impressive
increase from 701MW in 2007.
What could
possibly go wrong with subsidizing solar? After all, it is renewable, environmentally
sustainable and so forth.
Well, when
you are paying 12 times more than something is worth, you better not buy too much
of it. Unfortunately, Spain missed this lecture. The Spanish government has its
fingers all into and over its energy industry. There are mandates for clean
energy, for idle gas-fired plants, for poor families and for island dwellers. As
a consequence, the government is now about 35 billion euro in the hole from its
subsidies. To exacerbate matters, Spain is entering its second recession in
three years. The government has recently announced spending cuts and tax
increases of 100 billion euros. Unemployment has reached 25 percent. Spain,
strapped for cash, is now looking to cut back.
What to do,
what to do?
Got it! Spain
will tax the electricity produced by home solar panels. Homeowners will have to
connect their panels to the grid so their production can be metered – and
billed back to them, of course. The effect is to make self-generated power more
expensive than power purchased from the grid.
How much
more are we talking about for an average Spanish household? Approximately 27
percent more.
Spain’s
Industry Ministry justified this action by explaining that – even though you
may be self-sufficient – you “benefit” by having the back up provided by the power
grid. Not everyone will be affected, however – only those Spaniards living
within reach of the power grid. If you live in remote areas, you will be untouched
by this.
Oh, well. Maybe
you can sell your power back to the grid and offset somewhat this new cost. No
can do. Spain will not allow that. You will have to move to Germany if you want
to sell your excess power.
What if you refuse
to connect to the grid? Spain reserves the right to fine you up to 30 million
euros. Yipes! There has been pushback by consumer groups clarifying that this
fine was created in 1997 by a law intended for large corporations, not private
individuals. Someone will have to take that theory to court, however, to test
how sound it is. I can assure you that it would not be me.
The sad part
is that there is nothing here that a clear-headed person could not have seen
coming from a mile away, or at least since 2007. Every government benefit given
in turn is taken from someone else. This is the economics of taxation, and in
the end economics won out. The Spanish government is now scrambling to keep all
the spinning dishes from hitting the ground.
What do you
think: are they smarter than a garden gnome?
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