Subsidy for solar energy is crushing costs (and companies)

                  

The latest engine developed to stimulate solar energy is serving very well the function of reducing the cost of energy. It also threatens to destabilize the renewable energy sector.

In countries like India, Mexico and the United Arab Emirates authorities are shunning fixed subsidy payments for clean energy and moving towards the auction system.

The new system forces companies to compete for electricity sales contracts and resulted in supply offers Photovoltaics at rates that are minimal record this year. larger markets, including Germany and Japan, will begin the practice next year.

Governments opted for auctions to curb the uncontrolled expansion that appeared everywhere where traditional subsidies were tested.

Despite the new mechanism has produced a wave of contracts to developers well capitalized, industry executives fear that many of the projects do not generate profit or be built, threatening the finances of companies and environmental goals of the countries.

"I do not want to end up in a situation in which companies go bankrupt and have an unsustainable way of establishing the level of correct price in the industry," said Samuel Leupold, the biggest Danish power company vice president, Dong Energy in interview in London.

For consumers, the auctions are accelerating the fall of the cost of solar energy, which has lasted a decade, taking him very close to the coal-fired plants and natural gas.

Worldwide, coal plants generate electricity for only $ 34 per megawatt-hour and natural gas, for $ 47, according to Bloomberg New Energy Finance.

At the auctions, usually developers have offers for the price at which they are willing to sell the energy of the planned projects.

The lowest offers gain long-term contracts for energy sales at this price and, from there, companies can proceed with the construction of the plants.

In March, a unit of the main Italian energy company Enel agreed to sell solar energy in Mexico for US $ 35.50 per megawatt-hour.

And in May Masdar Abu Dhabi Future Energy and the Abdul Latif Jameel, Saudi Arabia, presented offer by a photovoltaic project in the United Arab Emirates that set a world record with supply offers solar power for only US $ 29.90 the megawatt-hour. Fortum won recent auctions in India, causing a sharp fall in prices in the country.

The auctions are gaining popularity and spreading to 40 countries. The impact has been strong: countries that began to carry them saw the cost of renewable energies fall to an average of 35 percent in the first year, according to Michael Liebreich, founder of Bloomberg New Energy Finance.

"This is absolutely critical to the success of the clean energy sector," he said.