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Spanish Photovoltaic Solar Energy: Institutional Change, Financial Effects, and the Business Sector

Author

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  • Raquel Fernández-González

    (ERENEA-ECOBAS, Department of Applied Economics and Faculty of Economics, Campus As Lagoas-Marcosende, University of Vigo, 36310 Vigo, Spain)

  • Andrés Suárez-García

    (Defense University Center at Spanish Naval Academy, 36920 Marin, Spain)

  • Miguel Ángel Álvarez Feijoo

    (Defense University Center at Spanish Naval Academy, 36920 Marin, Spain)

  • Elena Arce

    (Defense University Center at Spanish Naval Academy, 36920 Marin, Spain)

  • Montserrat Díez-Mediavilla

    (Solar and Wind Feasibility Technologies Research Group (SWIFT), Electromechanical Engineering Department, University of Burgos, Avda. de Cantabria s/n, 09006 Burgos, Spain)

Abstract

Spain is a country with a high dependence on fossil fuels. For this reason, in 2007, it implemented a bonus system that aimed to encourage the production of renewable energies, particularly photovoltaic solar energy. These production bonuses, guaranteed by the Spanish government, led to an exponential increase in the number of companies in the market and, consequently, the MWh produced. However, in 2012, given the excessive budgetary burden involved in maintaining this “feed-in tariff” system and after several years of institutional instability, the aforementioned system of incentives for phoyovoltaic (PV) energy was eliminated. This paper has tried to analyze the consequences of this institutional change, a clear example of the “hold up” problem. For this purpose, a sample of 5354 companies, which was divided, geographically, into Spanish regions and, temporarily, into three different periods, has been taken, considering diverse economic and financial variables. The results show a notable weakening of the sector that, due to the effects of the regulatory change, has lost attractiveness and profitability for investors and is consequently suffering from stagnation, which has led to the disappearance of many companies in the sector.

Suggested Citation

  • Raquel Fernández-González & Andrés Suárez-García & Miguel Ángel Álvarez Feijoo & Elena Arce & Montserrat Díez-Mediavilla, 2020. "Spanish Photovoltaic Solar Energy: Institutional Change, Financial Effects, and the Business Sector," Sustainability, MDPI, vol. 12(5), pages 1-18, March.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:5:p:1892-:d:327357
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