| Green industries are about to be flooded with billions from governments eager to simultaneously stimulate economies and fight climate change. These giant recovery packages are a once-in-a-lifetime opportunity to turn technologies that once sounded like science fiction into economically profitable companies that will cut greenhouse gas emissions. Unfortunately, with so much money in play, the opportunities for mischief, squandering or fraud are also aplenty. Here's a cautionary tale. In 2004, Spain's government decided to introduce subsidies to boost renewable power. At the time, solar and wind were still more expensive than other sources of energy. The logic was that a little push from government would help companies develop more efficient technology, build scale and lower prices. The moment seemed perfect. The country had just completed a full decade of uninterrupted economic growth. Construction was booming, unemployment was at record lows and the government was feeling optimistic. So then-Prime Minister Jose Luis Rodriguez Zapatero set up a program that allowed any citizen to build a solar or wind farm and sell power to the grid. The cost didn't matter—the government would cover the difference between the cost of generating renewable energy and the power price at any given time. "The sun can be yours," said one government slogan. "Be a patriot, invest in renewables," went another.  Chasing pretty bubbles. Source: Barcroft Media/Barcroft Media The renewable energy boom that followed allowed companies such as Iberdrola SA, Abengoa SA or Siemens Gamesa Renewable Energy SA to become leaders in the sector. A myriad of providers popped up around them, strengthening the supply chain, creating jobs and driving economic growth. Some worrying signs went unnoticed during those years of nationwide euphoria. There was the sheer amount of mom and pop investors putting all their savings into renewable power schemes that promised unreasonable profits. Or the fact that some solar farms were injecting energy into the grid… at night. Then on September 15, 2008, Lehman Brothers went bust and with it crumbled indebted banks and construction companies across the world, including those in Spain. The country's construction bubble burst and led to a devastating economic recession. The government cut subsidies for wind and solar and introduced new rules that effectively crushed retail investors. The renewable hype vanished overnight.  Since the crash, very few renewable companies have dared build projects in Spain and even local companies invested elsewhere. That reluctance, coupled with administrative hurdles and slow economic growth following the crisis, set the country's renewable sector back one full decade. Spain regularly posts the highest electricity prices in Europe, and last year Germany generated more than five times more energy from solar panels, according to BloombergNEF. "When a sector is incentivized, prioritized, when there are high expectations for demand, there's an immediate risk of a bubble," former Prime Minister Zapatero said last year. "I know that well." Still, the transformation in the sector was extraordinary, the architect of Spain's renewable subsidy model said at an energy-themed event by BP Plc. The model wasn't right, though, because renewable projects were bundled in packages and sold to investment funds, which then sold them to retail investors in a model similar to that of subprime mortgages, he said. About 62,000 Spanish families invested in solar farms went bankrupt when the rules changed. And the mystery of the solar panels producing energy at night? An investigation by Spain's National Commission of Energy discovered signs of fraud. To get more government subsidies, people had been hooking generators to the power substations that channel solar farms' power to the grid. To power the generators they used diesel, the cheapest but most polluting of fossil fuels. Laura Millan writes the Climate Report newsletter about the impact of global warming. | 
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