In Puertollano, Spain, solar power has been on the rise! So much so that the city is looking to replace a failing coal-based economy with a bright solar future, drawing solar companies with the slogan, “The Sun Moves Us.”

Although its history was built on coal, the mining community has been determined to turn to the ample renewable resources right above… the sun! In fact, the Spanish government itself had offered generous incentives to spur a national solar energy industry, which appeared to pay off.

In 2008, half of all new solar power installed worldwide was in Spain.

While Puertollano is home to the Museum of Mining Industry, today, the city includes two giant solar power plants – including a new 50 megawatt thermal solar plant owned by Iberdrola. It is also home to a number of factories that manufacture solar panels and silicon wafers.

Whereas Puertollano suffered 20% unemployment and declining population in recent decades, solar power growth helped turn that around. At least until Spain changed course on its solar policies in September 2009, slashing incentive payments and capping construction of solar factories and power plants.

What exactly happened and why? What lessons in solar incentives can we learn from Spain?

At the outset, Spain (like other governments) wanted to encourage solar industries and create green jobs. Subsidies are necessary for solar electricity generation given the cost of equipment and installation – not to mention the R&D that supports it.

Yet, solar costs have fallen dramatically in recent years. Continuing to provide funding artificially raised prices for solar. Moreover, funneling too much government money towards any and all solar industries did not allow for natural competition to occur. Everyone – even the poorly designed plants – received funds. It was difficult to determine which solar power plants would naturally survive, given location, management and even type of power plant (thermal or PV panels).

When the government cut back on its subsidies, natural competition began to sort things out. Will the same happen in the U.S. or other countries that are similarly working to encourage solar power growth?

For now, it looks like Spain will continue to be a leader in solar energy worldwide – it is second behind Germany – having generated 2.5 gigawatts of solar power in 2008. And Spain had set a goal to produce 400 MW of solar energy by 2010, which it reached by 2007! Puertollano itself enjoys reduced unemployment due in large part to its solar energy focus.

There are definitely lessons to be learned. At least they are growing pains that can be managed for a bright solar future!

Tags: bright solar future, manufacture solar panels, new solar power, puertollano solar, solar companies, solar incentives spain, solar power plants, spain solar, spain solar power, sun also rises, the sun moves us

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