Energy Journal: Sun Sets on Spanish Solar

June 8, 2013 by  
Filed under Solar Energy Tips

Here’s your morning jolt of news, insight and analysis on the global energy business. Send us tips, suggestions and complaints: and

Click here to receive this morning email newsletter


News that Spain is planning to cut subsidies for renewable energy production is a sad indictment of European energy policy and Spanish economic mismanagement, and it ties in with another big story this week.

The government-guaranteed revenue for renewable-energy production effectively acts as a subsidy because it is far above market rates, The Wall Street Journal’s Ilan Brat and Christopher Bjork report. For years, the subsidies and other overall costs of running the system have been higher than the amount of money generated by actual sales of power to households and businesses, resulting in a “tariff deficit” that Spain can ill-afford.

The solar industry, benefiting from huge start-up grants and subsidies in the previous decade, became too big, too soon.

The European Union believes China has been dumping solar panels and their main components, solar cells and silicon wafers, onto the continent. This has depressed prices, the EU says, and caused pain at the other end of the solar industry—manufacturing.

Europe and China are now facing off in what looks like the beginnings of a new trade war.


The previous Energy Journal noted the flood of Chinese money into Central and South America. (The Asian giant is even planning an alternative to the Panama Canal in Nicaragua, the Guardian reports, a frankly astonishingly ambitious attempt to create a new trade route.)

Just as the U.S.’s attention drifted away from the region, confident that the Reagan-era ideological battles had been won, the Chinese moved swiftly in with bulging wallets.

Could it be that China now sees Latin America as a better place to do business than Africa? For now, there seems to be a warm welcome for yuan-toting investors south of the Rio Grande. In Africa, where Chinese companies have been relentlessly investing and extracting for a decade or more, there appears to be something of a backlash.

The government of Gabon has said it will reclaim assets from China’s Sinopec oil company due to alleged breaches of contract, the Financial Times reports. Gabon is seen as the next big African offshore oil play, and the recent creation of a national oil company suggests the West African nation is determined to retain control over any bounty.

The initial appeal of Chinese companies for African governments, over those from Western nations, was always the unfettered approach they took to their business. Many prioritized growth over the environment and local quality of life, and Chinese workers settled in vast numbers and worked for low wages, as reports.

A different approach will be needed in South America, where extractive industries are far more established, and there will certainly be no room for the sort of illegal small-scale mining recently seen in Ghana.

But money talks as loudly in Caracas as in Kinshasa. And China is where the money is.


There’s been a clamor about shale gas in the U.K. ever since an announcement of copious amounts of the stuff had been found in northwest England. This looked to have reached fever pitch earlier in the week, when City AM ran this cheer-leading front page.

It’s all about to ratchet up a notch or three, though. Britain’s biggest domestic energy supplier, Centrica, is in talks to acquire a stake in the Bowland shale.

But wait. Cautionary tales are now emerging from the North American gas glut. Prices may be low, which is good for consumers and industry, but ways of making money from the industry’s periphery are shrinking.

The Journal’s Dan Strumpf reveals how Wall Street banks and trading firms are shrinking their footprint in the natural-gas storage business, as booming output damps price volatility and potential profits.


Brent crude oil futures were heading toward the end of their first positive week since mid-May Friday morning, as a weaker dollar and tighter market produced cautious but steady gains. The Journal’s market report is here.

Comments are closed.