Green Energy’s Crisis of Confidence in the Mediterranean

February 28, 2012 by  
Filed under Green Energy News

wind power

wind power (Photo credit: twicepix)

Given the current economic state of Southern Europe, its to be expected that an industry so heavily dependent on the good will of investors and government support should be growing restless. However, over the last few weeks, through conversations with individuals at all levels of the European renewable sector,  a surprisingly deep and discernible crisis of confidence appeared to be taking hold.

Investors appear wary about looking beyond what’s already in motion. Developers seem cautious about planning and predictions, adding qualifiers to any answer that extends beyond the middle of this year. Even small scale consumers, exploring the possibility of adopting solar solutions give pause when talking about finally making a decision on the matter, preferring instead to kick the can a little further down the road.

At the heart of all of this is a lack of faith that current political leadership has much of a real plan for the future of renewable energy in Europe. Sure they want to be certain it remains a viable force of growth in their country, but what sort of hand they should have spurring that process remains unclear. European Union energy and environmental leaders may still pledge sprawling strategies to reach 2020 sustainability goals and beyond, but on the local level, the challenge of reigning in spending without putting a nail in the coffin of the domestic industry has left many in limbo.

This week, The Guardian released a survey of the wind power actors, painting a picture of an industry in search of “clarification and reassurances from ministers on future energy policy in the wake of growing political opposition”. While the survey focused on those operating in the UK, the sentiment is prevalent across the region and is most evident in Europe’s Mediterranean states, where economic and political uncertainty have led many solar and wind actors to simply press pause.

“Its difficult to make decisions without long-term planning,” said William Hopkins, commercial director for RES Med, a wind and solar solutions company with projects in Italy, France and Turkey.

In most situations, frustration has been aimed at governments’ evolving approach to subsidy and support programs, making it impossible to dedicate funds to projects with such uncertain rates of return. With both elected and appointed governments in Italy, Spain and France charged with a strict goal of deficit reduction, support for solar and wind projects has become an easy target for spending cuts. In the case of Spain’s new Partido Popular government, this has meant repeated adjustments to support programs with no assurance that new cuts will not be introduced to deal with the country’s $32.2 billion energy deficit. Adding to the unease, reports emerged earlier this month suggesting the government may again target existing projects. The move was followed by an Ernst Young report this week that dropped Spain out of their top ten most attractive countries to green investors, after holding the number one spot just five years ago.

In Italy, political delays related to the country’s new energy strategy and potential cuts have forced developers into a wait-and-see holding pattern when it comes to dedicating funds for new projects.

“We’re hoping that the renewables market sits on the growth side of the fence rather than the austerity side of things,” Hopkins said, in reference to the Italian government’s still uncertain plans for the industry.

Meanwhile, the overall fiscal standing of Greece has led some foreign investors to say off the record that they will write off Athens for the next few years at least.

Still, not all the delays stem from government inaction. Some have emerged from vigorous protest movements to the cuts themselves. In Spain political and industry advocacy groups have mounted opposition to planned subsidy reductions, arguing that keeping them is place is vital to keeping jobs local and ultimately spurring much needed growth. This week, Bloomberg reported that even in Germany, Chancellor Angela Merkel is facing opposition from members of her own party aimed at slowing planned cuts in the name of protecting the domestic production market.

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