The real price of solar energy ?!

All across Europe feed-in tariffs and subsidies for solar power are being cut or even scrapped. In Portugal and Spain, these actions are justified with the debt crisis, even though they expand these states’ trade deficit. This month the Spanish government took a decisive move to scare investors away and expel most renewable energies from the electric grid, particularly solar.

Exclusive: Foreign investors set to sue Spain over energy reform

(Reuters) – Foreign investors in renewable energy projects in Spain have hired lawyers to prepare potential international legal action against the Spanish government over new rules they say break their contracts.

The Spanish Parliament approved a law on Thursday that cuts subsidies for alternative energy technologies, backtracking on its push for green power.

That measure, along with other recent laws including a tax on power generation that hit green energy investments especially hard, will virtually wipe out profits for photovoltaic, solar thermal and wind plants, sector lobbyists say.

Diving into the numbers what one finds behind this policy U-turn is something entirely different.

Investing on Solar Power

The upfront investment on a PV system has three main components:

    • panels of solar cells, that harvest the energy;
    • an inverter, that tames the raw current coming from the panels into a form digestible by the electrical grid;
    • and installation, that includes, labour, paperwork and whatever else needed to get the system up and running.

Panel size or capacity is described with the maximum amount of power they can harvest at optimal sunshine conditions; this is measured in Watts-peak (Wp). Panel prices are quoted in €/Wp and since both the inverter and installation costs scale closely with panel capacity, companies can provide a price for the ensemble on a convenient €/Wp basis.

There is an ecological fair every year in a Luxembourg city by October, better known by the Luxembourgish term: Oekofoire. I was there last year and took my time at the PV companies booths that usually litter the place. Back then the price asked by these companies for a solar system was at 1.6 €/Wp. This price comprised 0.6 €/Wp for the panels, 0.2 €/Wp for the inverter and the remainder 0.8 €/Wp for installation. The fact that the basic hardware is now only half the price of a PV system already indicates that reality may not be exactly matching the political discourse. By December I got the information that in Germany these prices were already down to 1.3 €/Wp, in places with good access and ease of installation. This reflects the relentless price decline of both solar cells and inverters, the former declining by 40% in 2012 alone.


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