Spain is typically put forward by advocates of renewable energy as the country that other jurisdictions should emulate.  Yet Spain is clearly having second thoughts about its head-long rush into the renewable-energy subsidy game.

For now, electricity generation from the sun’s rays needs to be subsidized because it requires the purchase of new equipment and investment in evolving technologies. But costs are rapidly dropping. And regulators are still learning how to structure stimulus payments so that they yield a stable green industry that supports itself, rather than just costly energy and an economic flash in the pan like Spain’s.

“The industry as a whole learned a lot from what happened in Spain,” said Cassidy DeLine, who analyzes the European solar market for Emerging Energy Research, a firm based in Cambridge, Mass. She noted that other countries had since set subsidies lower and issued stricter standards for solar plants.

Unfortunately, McGuinty and company appear to be slow learners.

When it was announced in the summer of 2007, Spain’s premium payment for solar power was the most generous anywhere — 58 cents per kilowatt-hour — with few strings attached.

In retrospect it was far too high. “Everyone from all over the world was installing in Spain as fast as they could, and every biologist who could add was working in solar,” said Pedro Banda, director general of the Institute of Concentration Photovoltaic Systems, one of the research institutes in Puertollano.

Even inefficient, poorly designed plants could make a profit, and speculation in solar building permits was common.

Despite large declines in solar panel prices since 2007, Ontario is offering 44.3 to 80.2 cents per kilowatt-hour for solar PV projects under its Feed-in Tariff program. This is either very courageous or very stupid. You decide.

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