Nestled in the Spanish hills, Puertollano was once a center of the coal mining industry. But coal went bust, and the residents started looking for another source of income. They found one in the sun that shined overhead. In 2007, armed with incentives from the Spanish government, Puertollano became a major hub for solar energy. But as the New York Times reports, this solar boom soon went bust.

Almost overnight, it seemed that Puertollano became a center for solar energy. Two large solar power plants were built, along with factories making solar panels and silicon wafers. Clean energy research institutes sprung up in the area. People from all over the world flocked to the city, revitalizing its downtown area. By 2008, half of the solar power installed globally was in Spain.

But soon, problems began springing up. The NY Times reports that because solar plants could be set up so quickly, the rush into the industry was much faster than anticipated. This led to low-quality, poorly designed solar plants. The extreme subsidies pushed up Spanish solar installation costs at a time when they were rapidly decreasing elsewhere. Experts note that this happened in part because China entered the competition.

The solar industry of Puertollano went bust. The government determined that this shoddily built industry would have to be permanently subsidized, and Madrid realized that the industry would never be cost-effective. Payments were cut and construction was capped. In turn, new solar factories closed, thousands lost jobs, and banks pulled out on contracts.

This all happened to the utter dismay of the people. Joaquín Carlos Hermoso Murillo has been Puertollano’s mayor since 2004. As he told the NY Times, “We lost the opportunity to be at the vanguard of renewables — we were not only generating electricity, but also a strong economy.” Murillo asked, “Why are they limiting solar power, when the sun is unlimited?”

Many worry that what happened in Spain will happen elsewhere, but at least the city has provided an example of what not to do. Cassidy DeLine analyzes the European solar market for Emerging Energy Research in Cambridge, Mass. She notes that other countries have since set subsidies lower and issued stricter standards for solar plants. As DeLine told the NY Times, “The industry as a whole learned a lot from what happened in Spain.”

Some experts say Spain could still emerge as a world leader in solar power. Even though the incentives didn’t work, they did lay the groundwork for solar energy to be cost-competitive. In the end, Puertollano hasn’t made off as bad as it could have. The city’s unemployment hasn’t returned to its pre-solar heights, and its solar plants are still running.

For further reading: Solar energy learns lesson in the Spanish sun