World Economy Assignment Solar energy for the Valencian Community 7th of January 2013 Group 13

Maria Colom Boudewijn Groeneveld Erika Anna Gyurk Gonzalo Gimeno

Table of Contents :

Introduction.................................................................................................................................3 SWOT-Analysis..........................................................................................................................4 Critical Success Factors :............................................................................................................5 Blockers and Enhancers..............................................................................................................7 Public Policy...............................................................................................................................8 Conclusion, References & Sources.............................................................................................9

Introduction
The City Council of Valencia asked us to prepare a background paper to define a new plan to attract private investment and to improve business environment in the city. Valencia is the third biggest city together with Sevilla in Spain with approximately 809,0001 inhabitants. As we know there are not many rainy days but a lot of sunny days in the area2. In and around the Valencian community, there are merely plain areas with barely anything growing on it. We thought that by the help and use of Solar panels we could improve the business environment in the city. With the help of investors and the Community we think that running businesses on green energy is a big step towards the improvement of the business environment. When this occurs, it will automatically attract private investment because nowadays everyone is for a greener planet and greener use of the energy. As mentioned before Valencia has many sunny days and many deserted areas and putting solar panels there would be a great idea to improve the business environment.

1 2

http://www.simplyvalencia.org/valencia/information Visited 10th December 2012 http://www.aemet.es/es/serviciosclimaticos/datosclimatologicos/valoresclimatologicos?l=8416&k=val Visited 10-12-12

SWOT-Analysis
Strenghts - Economically sustainable - Environmentally sustainable - Cheaper in the long-run - Subsidies from European Commity of the Regions and National Government - Attracts Private investment - No CO2 Emissions, very economical - Works best in an environment that is not known as hot Opportunities - Generate more energy than needed. Surplus of energy that wont be used, but that can be sold Weaknesses - Expensive to aquire - Expensive to maintain - Pollution can be a disadvantage to solar panels, as pollution can degrade the efficiency of photovoltaic cells.3 - The national and local economy may not be strong enough to help or finance this project

Threats - Other companies can come up with alternative ideas that might be better and/or cheaper

http://www.clean-energy-ideas.com/articles/disadvantages_of_solar_energy.html visited 11-12-12

Critical Success Factors :

Renewable energies beat their brands and generate 30% of electricity in Spain.

On this map we can observe the share of renewables in the electricity balance of countries in the EU and other countries.

As mentioned, Valencia is a city located on the Mediterranean coast and therefore has perfect climatic conditions to use this type of solar energy, since it receives large amounts of solar radiation.

So, if we exploit this type of renewable energy in Valencia, it will favor our economy because of the increase in the production (GDP), more people will be hired and also unemployment will decrease since more people have found a job. Overall it creates jobs and the use of Solar panels is environmentally sustainable. Moreover there will be lots of subventions coming from the EU institutions such as the committee of the regions that supports the use of this renewable energy.

We can diversify this solar energy utilities for example with solar panels, to reduce energy consumption in homes, solar thermal energy and biomass.

Blockers and Enhancers

We can find many critical enhancers when talking about solar energy. The most obvious and important one is the fact that this energy doesnt contaminate the environment and, of course it is an inexhaustible source as it comes from the sun. Another important fact is that the cost of solar energy decreases as technology improves while the price of fossil fuels increase over time as they are more and more scarce. The only investment needed is the initial cost of the infrastructure as it requires no fuel to operate, and it can be amortized over 5 years of implantation. Moreover, solar energy produces no waste, and solar capture systems are easy to maintain. It can also be said that the availability of solar energy reduces dependence on other countries, and this sector also promotes job creation, needed to manufacture solar cells and panels, and also for the installation and maintenance of the same.

We can also find some blockers for solar energy:

When we decide to use solar energy for a significant population, we need large land extensions, and it has less efficiency than other systems. Besides, radiation levels vary from one region to another, and the same happens with seasons. Moreover solar energy requires a strong initial economic investment, which many consumers are unwilling to risk.

Finally, the main problem in our country is the financial crisis, the government offers grants in form of loans up to 100% in projects that promote the use of solar energy, but because of the housing bubble the construction of new buildings in our city Valencia has been paralyzed.

Public Policy
The Treaty of Lisbon places energy in the middle of the European activities. The aim of the policy are supported by market-based tools taxes, subsidies. Solving the energy crisis is going to take a lot of social action combined with government support. Rising energy costs are finally starting to force global leaders to research alternatives and provide the funding to make changes. Issues like global warming are becoming mainstream reality and causing worldwide concerns about pollution and consumption. The solar industry is in growth mode, but it still only a modest part of the energy economy.

A dozen large solar fields would completely consume the industrys manufacturing capacity. Even small-scale policy decisions can cause large swings in the industrys outlook. The solar system requires market support mechanisms, in the fields of public policy, in order to maintain current growth rates. Stability is paramount for solar industry support mechanisms. Technological innovation is essential to ensure further sector growth and energy market penetration, Market participants should pursuing improvements aswell. The solar generation markets will support many different technologies as their characteristics fit different applications, although some technologies will fare much better than others. The sector has to work with parts of the power industry to find out how to improve the solar system further to the in the field of electricity in order to reach each individual regional market.

A comprehensive public opinion survey we can get to the following conclusions: Energy issues are considered to be important but not at first glance. EU citizens perceive great future promise in the use of renewable energies. The possible future consequences of energy issues do not generate deep fears in Europeans minds. Europeans appear to be fairly familiar with energy issues.

Energy issues touch everybody and it is therefore hard to distinguish clear groups with differing perceptions. Nevertheless, rough distinction between groups of citizens is sketched. (http://en.wikipedia.org/wiki/Energy_policy_of_the_European_Union#Public_opinion)

We hope that these movements will have a positive effect in the the recovery from the crisis, in an economical and ecological way, which is furthermore supported by the European Union.

Conclusion, References & Sources

To conclude, we can affirm that the use of solar panels would be great for the Valencian community as it would improve the business environment and it would increase private investment because everyone is for the use of cleaner energy. The downside of this process however is that it is very expensive to aquire, since this project is meant to be for the long-run, there shouldnt be a real problem as in the long-run solar energy becomes very profitable. Third-parties are also involved in this process being the ones that subsidies and support the use of solar panels such as the CoR (European Committee of the Regions) and perhaps the local and national government. This creates advertisement and this could lead to promotion for the whole Valencian Community in the tourist section. The investment in solar panel technology increases local economic activity three ways. First local companies that sell solar energy product directly benefit. Second, a regenerative cycle is created when funds realized by energy savings in the companies. Third, lower utility bills for residential energy consumers result profit increase and income. With all three effects most of the profit or money will be spent locally. All in all, the use of solar energy is a good thing because everyone benefits from it in the long-run.

Websites: - www.freticalor.com Solar Energy for the Valencian Community - Pictures taken from throughout the assignment are taken from www.google.com/images - http://www.solarenergy.org Official Website of Solar Energy International - http://www.lamoncloa.gob.es/IDIOMAS/9/Espana/index.htm Spanish Government Statistics - http://cor.europa.eu/en/regions/spain/Pages/spain.aspx Information of the projects the CoR has running in Spain - http://en.wikipedia.org/wiki/Energy_policy_of_the_European_Union#Public_opinion