SOLAR ECLIPSE?: Generous subsidies have allowed solar power plants to flourish in Spain, such as the "power tower" outside Seville pictured here. But those subsidies are dwindling and new solar power may fade with them.
Courtesy of Abengoa

On the outskirts of Seville, Spain, 600 rotating mirrors send shafts of light to a collector atop a soaring 380-foot- (115-meter-) tall tower. Its scalding 480-degree-Fahrenheit (250-degree-Celsius) steam drives a turbine generating a peak capacity of 11 megawatts (MW) of electricity for the national grid. This "power tower" is the first of nine to be built by Spanish engineering giant Abengoa Solar, which all told will produce enough electricity for 153,000 homes by 2013.

From power towers to parabolic trough plants and from photovoltaic farms to roof-mounted solar panels, solar energy is booming in Spain. This month, Europe's first commercial solar-thermal parabolic trough plant—a 15-mile (24-kilometer) curved mirror complex dubbed Andasol that focuses light on collector tubes with synthetic oil bubbling to 750 degrees F (400 degrees C)—revs up in Andalusia. Vast acres of solar farms using photovoltaics made from semiconductors to convert sunlight to electricity now span southern Spain: Celebrated ground-mounted photovoltaic (PV) plants include La Magascona and Jumilla with their array of 120,000 modules on 120 single-axis "follow-the-sun" trackers.

Even carmakers want a piece of the Spanish sun. In July General Motors said it will build the world's biggest rooftop solar power station in Spain, carpeting two million square feet (185,800 square meters) of the roof at its Zaragoza automobile plant with 85,000 flexible solar panels. And the 50-megawatt Andasol plant is also the world's largest facility employing molten salts to store renewable energy: 28,500 tons of molten potassium and sodium nitrate salt in two tanks that bank excess solar heat for more than seven hours.

Plentiful sunshine isn't the only reason entrepreneurs and industry have flocked to Spain. The Spanish advantage includes abundant land, strong demand for air conditioning, mammoth infrastructural firms to fast-track projects, and, most importantly, generous subsidies. The nation's feed-in tariffs guarantee 25 years of up to triple the market price for solar energy, making it the world's hottest solar market, trailing only subsidy-richer Germany as well as the U.S. with its historical lead in developing solar technology.

"Feed-in tariffs shift competition to manufacturers, creating an incentive for innovation," says Wilson Rickerson, a Boston-based energy consultant. "Manufacturers that can produce the most efficient and cost-effective ways of generating energy gain most."

In fact, money committed for Spanish PV projects (mostly ground-based) shot up nearly 500 percent from 2006 to 2007 to a total of $3.45 billion, according to London-based New Energy Finance, a renewable energy market research firm.

But obscuring the light are a few clouds. This month Spain slashed the maximum capacity of solar farms that can claim subsidies from 1,200 MW to just 500 MW. Installed PV capacity has already tripled to 1,500 MW in under a year, should double again by 2010 to 3,000 MW, and more than triple to 10,000 MW by 2020. Spain also cut PV feed-in tariffs by about a third to around 33 eurocents per kilowatt hour. Solar-thermal executives fear the same fate within 24 months as new plants add solar power.

That's led many companies to mull other markets. Though Spain backpedaled on severe cuts after panel makers balked, companies like Energias de Portugal Renovables are pulling out because of profit worries and, in August, BP shelved plans for the world's largest solar panel plant in Spain. Critics have warned that when subsidies dry up, so will solar's appeal. "PV project developers rushed to Spain because subsidies guaranteed returns well above the cost of generating power," explains Nathaniel Bullard, a solar associate at New Energy Finance. "Cuts will drive developers to other markets with high subsidies."