What Happened To Spain's Feed-in-Tariff Program?

Eight months after Spain changed it feed-in tariff program and dramatically shrunk its market, it has come to exemplify what not to do when crafting policies aimed at boosting solar production and business in the U.S. Spain has boldly gone where few others have dared to venture by offering generous incentives that made the country the top market for solar energy project deployment in 2008. It's unlikely to claim that crown this year. The government decided to dramatically shrink its incentive program for 2009. Not only that, it's held up as an example of what not to do in crafting solar incentives. If the United States moves forward with a similar program, you can bet that you'll hear a lot about the Lesson From Spain.

Feed-in tariffs are guaranteed rates for solar power. They are much higher than the price of conventional power, and utilities must buy solar electricity at those government-set rates via long-term contracts. Such policy has helped to make Germany a top solar energy producing country. Spain followed suit with its own, very generous feed-in tariff and set a national cap of 400 megawatts that was supposed to last from 2007 through 2010. The amount of solar energy installed reached 344 megawatts by September 2007, prompting the government to scramble to decide whether to raise the cap and adjust the solar electricity rates.