CCNet – 4 April 2012
The Climate Policy Network
The West’s Green Nightmare
Italy will move to reduce taxpayer subsidies to its renewable energy sector after last year’s boom in solar power, Industry Minister Corrado Passera says. Some estimates contend the feed-in tariffs paid to photovoltaic user/generators will amount to $59 billion over the next 20 years. —UPI, 3 April 2012
Solar Trust of America LLC, which holds the development rights for the world’s largest solar power project, on Monday filed for bankruptcy protection after its majority owner began insolvency proceedings in Germany. —Reuters, 3 April 2012
The German solar industry is at a turning point. The bankruptcy of Q-Cells this week shows that the days of German solar cell production are numbered. It wasn’t so long ago that people viewed Q-Cells as an energy company of the future. At one point, it was the world’s largest manufacturer of solar cells. Q-Cells’ insolvency comes as a great shock to the Germany’s solar industry. It is already the fourth major bankruptcy in a sector in crisis. Ironically, just as the boom was fuelled by government money, those same subsidies have accelerated the bust. The worst hit in the German solar crisis are companies that made bad business decisions. Most of the companies effected failed to wean themselves from reliance on government subsidies. –Stefan Schultz, Spiegel Online, 2 April 2012
I was still in college when the first wave of solar power enthusiasts started selling the world on the vision of cheap, unlimited power from the benign and eco-friendly sun. It was a beautiful idea then and it still is one today. Solar power is still a beautiful dream with just one tiny little catch. The prettiest unicorns have a way of dancing so tantalizingly, just out of reach. –Walter Russell Mead,Via Meadia, 3 April 2012
THE Department of Climate Change will scrap up to 300 jobs – one-third of its workforce – as the Australian government clamps down on spending in its effort to return the budget to surplus. –Matthew Franklin, The Australian, 4 April 2012
1) Near-Bankrupt Italy Faces $60 Billion Solar Bill – UPI, 3 April 2012
2) Bankruptcies Have German Solar On The Ropes – Spiegel Online, 2 April 2012
3) Solar Trust of America files bankruptcy – Reuters, 3 April 2012
4) Killing Green Jobs: Labor Takes Axe To Climate Bureaucrats – The Australian, 4 April 2012
1) Near-Bankrupt Italy Faces $60 Billion Solar Bill
UPI, 3 April 2012
Italy will move to reduce taxpayer subsidies to its renewable energy sector after last year’s boom in solar power, Industry Minister Corrado Passera says. Some estimates contend the feed-in tariffs paid to photovoltaic user/generators will amount to $59 billion over the next 20 years.
The official said Saturday in Cernobbio, Italy, that taxpayer subsidies doled out to the wind and solar power industries had generated “excessive” investments in the sector, The Wall Street Journal reported.
“Italy has important goals to meet and even surpass,” he said, but added, “we need to do so without over-reliance on taxpayer resources.”
The government, Passera said, will in the coming years “realign” the level of its incentives to those of other European countries.
The comments came a day after Paolo Andrea Colombo, chairman of Italian electric utility Enel SpA, said the heavy subsidization of alternative energy was hurting traditional producers such as his company.
“The development of renewables, combined with the stagnation of demand, is making it difficult to cover the production costs of conventional systems, putting at risk the ability to remain in operation,” Colombo said.
The problem, Enel contends, is that that big investments were made in traditional power plants in order to ramp up production at levels that are no longer necessary with the boom in solar and wind, which account for 26 percent of Italy’s electricity production.
Nando Pasquali, the chief of Italy’s GSE energy services operator, said last week that preliminary 2011 estimates of the country’s renewable capacity stood at about 41 gigawatts, with a total output of 84,000 gigawatt hours, the Agenzia Giornalistica Italia reported.
The estimate put the number of active generation plants at 360,000, with incentives totaling $10.7 billion — more than enough to put Italy on target to reach the European Union’s goal of generating 29.4 percent of Italy’s electricity from renewable sources.
Last year saw a huge jump in the installation of solar power capacity — a boom that happened despite the recession, the sovereign debt crisis and the fall of the government of Prime Minister Silvio Berlusconi. Some 9 gigawatts were connected to the country’s grid last year, nearly quadrupling its total capacity and bypassing Germany as Europe’s leader in the regard.
But the solar installation boom has put a burden on Italian ratepayers.
Some estimates contend the feed-in tariffs paid to photovoltaic user/generators will amount to $59 billion over the next 20 years, and so the government last year moved to reduce the tariffs for new plants.
Passera also said Saturday at the Ambrosetti Forum annual business conference that energy prices are too high in Italy, and talked up the possibility of developing more domestic oil and gas resources, Corriere della Sera reported.
“We must keep (energy prices) from growing further,” he said, pointing to the further liberalization of the gas market as “a way to think about the reductions.”
The country should tap “the potential of Italian resources that we have,” such as “oil and gas fields not yet developed. This will help in both the short and medium-term,” the industry minister said.
(2) Twilight Of An Industry: Bankruptcies Have German Solar On The Ropes
Spiegel Online, 2 April 2012
The German solar industry is at a turning point. The bankruptcy of Q-Cells this week shows that the days of German solar cell production are numbered. Asian competitors took the lead years ago, and German government subsidies were part of the problem.
It wasn’t so long ago that people viewed Q-Cells as an energy company of the future. At one point, it was the world’s largest manufacturer of solar cells and quarter after quarter, it topped analysts’ expectations. The company proved to be a money-making machine even during the financial crisis, with some believing it might one day grow to become part of Germany’s DAX index of benchmark companies on the stock exchange.
At the end of 2007, the company was valued at close to €8 billion ($10.7 billion at today’s rates). Q-Cells’ production facilities were located in the city of Bitterfeld-Wolfen, in a former lignite mining area in the eastern German state of Saxony-Anhalt. The area was even dubbed “Solar Valley,” a play on California’s Silicon Valley.
For a some time now, though, the days have been growing darker in Solar Valley, and with this week’s bankruptcy announcement by Q-Cells, things are looking to get even darker. On Tuesday, the company as expected submitted its official request to begin bankruptcy proceedings. The energy company of the future looks as though it may no longer have one. The company, it turns out, simply wasn’t prepared for the fast changes that have buffeted the industry.
In 2011, Q-Cells posted a loss of €846 million. As of last Tuesday, the firm had a marginal value of only €35 million and Q-Cells’ share price had plunged to just 9 cents. In Bitterfeld-Wolfen, concerns are growing about massive job losses among the 2,200 Q-Cells workers in the city.
But Q-Cells’ insolvency also comes as a great shock to the Germany’s solar industry. It is already the fourth major bankruptcy in a sector in crisis, and it underscores the degree to which German solar firms are being outpaced by competition from Asia — despite billions in German government subsidies granted each year to the industry. And despite solar energy gradually becoming more competitive, the setbacks are rapidly mounting.
A String of Bankruptcies
In December 2011, two major solar companies slid into bankruptcy: Berlin-based Solon and Erlangen-based Solar Millennium. In the case of Solon, Indian firm Microsol acquired the core business; but of the company’s 1,000 employees, only 400 remain employed today. Solar Millennium’s bankruptcy came as a major blow to thousands of small investors who had lent the firm money.
In March 2012, Freiburg-based Scheuten Solar, the firm that presented what was the world’s largest solar module at the time eight years ago, declared bankruptcy. The same month, power plant producer Solarhybrid and the Frankfurt an der Oder-based Odersun, which had been prestige projects supported by political leaders in the eastern state of Brandenburg, also filed for insolvency proceedings. Other bankruptcies are likely to follow.
3) Solar Trust of America files bankruptcy
Reuters, 3 April 2012
Solar Trust of America LLC, which holds the development rights for the world’s largest solar power project, on Monday filed for bankruptcy protection after its majority owner began insolvency proceedings in Germany.
The Oakland-based company has held rights for the 1,000-megawatt Blythe Solar Power Project in the Southern California desert, which last April won $2.1 billion of conditional loan guarantees from the U.S. Department of Energy. It is unclear how the bankruptcy will affect that project.
Solar Trust said it ran short of liquidity after Solar Millennium AG, which holds a 70 percent stake, sought court protection in December.
Solar Millennium then tried to sell that stake to solarhybrid AG, but that transaction collapsed when solarhybrid also sought court protection in Germany.
Edward Kleinschmidt, Solar Trust of America’s chief operating officer, in a court filing said the company has already missed two quarterly rent payments on the Blythe project, and cannot make several other payments due imminently.
He said NextEra Energy Resources LLC has committed to provide some financing and “expressed an interest” in serving as an initial bidder for some assets.
Ferrostaal AG owns the other 30 percent of Solar Trust of America but does not provide financial help, Kleinschmidt said.
Solar Trust of America and several affiliates filed for protection from creditors with the U.S. bankruptcy court in Delaware. It estimated to have as much as $10 million of assets, and between $50 million and $100 million of liabilities.
4) Killing Green Jobs: Labor Takes Axe To Climate Bureaucrats
The Australian, 4 April 2012
THE Department of Climate Change will scrap up to 300 jobs – one-third of its workforce – as the Gillard government clamps down on spending in its effort to return the budget to surplus.
Department secretary Blair Comley yesterday wrote to all staff calling for applications for voluntary redundancies, citing the “conclusion of a range of programs”, the government’s efficiency dividend and the need to accommodate wage rises.
News of the cuts came last night as employees of the Department of Regional Australia, Local Government, Arts and Sport braced for possible job cuts expected to be outlined today in a meeting of staff in Canberra ahead of next month’s 2012-13 budget.
It is understood the cuts relate to funding reductions previously ordered by Wayne Swan. But with the Treasurer pledged to return the commonwealth budget to surplus in 2012-13, with major cuts including the dumping of whole programs, Canberra’s bureaucratic circles are bracing for further pain in the budget.
Community and Public Sector Union national secretary Nadine Flood warned last night that the cuts would damage government service provision and demanded that the government rule out forced redundancies.
“These are massive cuts to staffing,” Ms Flood told The Australian. “Losing 20 to 30 per cent of an agency’s workforce must mean the government can no longer deliver the same functions.