2
Sector analysis
Spain’s solar PV market shines on Recently the European Union’s National Energy and Climate Plans (NECP) pledged to install 209GW of solar PV by 2030 – equivalent to 19GW per year. The region as a whole has grabbed onto the reins of the sector, and countries are slowly showing signs of forming and bolstering their own respective portfolios. Spain has been leading this race into the sunny horizon as one of the fastest growing European PV markets. The Spanish NECP has a 74% target of renewable electricity generation for 2030 and is anticipated to install 92.2GW of solar PV alone by 2030. Healthy additions in the last few years helped the country become the second largest PV market in Europe, with over 2.6GW installed in 2020 amidst the global pandemic. The country’s favourable environment for the technology, with one of the highest volumes of sunshine in Europe and land accessibility, has provided a strong foundation for its deployment. However, it is its financial and legislative backing that further supports its installation, which was only recently introduced. In 2015, the Spanish government suspended all incentives for solar PV due to its financial situation. The removal of feed in tariffs brought construction to a halt until 2018 when the legislation was finally eased. Since then, capacity market auctions in the country have continued to thrive for the sector. In January, the Spanish government announced the results of its latest renewable energy auction for 3GW, with solar PV securing 2.04GW of the allocated capacity. Costs have now drastically fallen below wholesale power market prices, allowing for a range of new routes to market and more investors to enter the country. As such, Spain has been able to further stabilise the market’s financial standing, with an evolving portfolio of subsidy-free developments. Spain currently covers 46% of Europe’s subsidy-free solar PV pipeline and is the largest market for power purchase agreements (PPA). More upcoming proposals now include PPAs and merchant investments, or models combining both, providing routes to market with lower risk. The start of 2021 continued the trend of an influx of PPA agreements, with the country now also becoming an exciting space for corporate PPAs in particular. In January, Iberdrola signed a PPA with Danone for the 590MW Francisco Pizarro plant. The €300m project is claimed to be the largest in Europe and is set to begin operations in 2022. PPAs are also starting to be signed with developers for specific power capacities generated from a portfolio of solar plants (or combined with wind power plants), rather than from an individual project. For example, in March Spanish steel company Sidenor signed a 10 year PPA with Naturgy Energy Group to procure 350GWh of renewable energy generated from its wind and solar farms.
Sharan Amidst the flood of solar ya Kum aramu rthy additions, industry experts have been concerned about limited grid access for the rapidly developing sector. In June 2020, the country was facing a surplus of requests for grid access for renewables, which amounted to over 430GW of generation – seven times what is needed to meet its 2030 targets. New legislation was passed last summer to tackle the grid access backlog from the last 16 months. The new law creates a three month moratorium on the issuing of new permits until the regulation is approved by congress and the regulator. This resulted in 39.3GW of new renewable capacity being renounced by developers in December, due to not meeting the new deadline.
With so much activity and opportunities in the sector, major oil and gas players have also made large investments in Spain to easily transition into the solar industry. Lightsource BP is dominating the scene, having recently added another 845MW to its Spanish pipeline from local developer Iberia Solar. The company has added nearly 2GW of Spanish capacity in the last two months to its portfolio, with 1.06GW from RIC Energy. Eni has made its first renewables investment in the south of Spain, acquiring three PV projects totalling 140MW from X-Elio. Both companies have also entered further discussions for a larger collaboration of clean energy projects in the country. Total has an agreement with the Spanish developer Ignis to develop 3.3GW of solar projects near Madrid and Andalusia. Repsol also has three projects under development – the Valdesolar, Sigma and Kappa plants – totalling just under 600MW. The strong market has also become a hotspot for the future development of green hydrogen via solar energy, with the country having a target of 4GW of green hydrogen by 2030. The European initiative – HyDeal Ambition – includes a number of solar developers that aim to deploy 95GW of solar for green hydrogen production by 2030. Small-scale floating PV plants are also anticipated to be of interest in the long-term future, with pilot projects slowly emerging in the region. One example of this is a 250kWp pilot floating PV unit off the coast of Gran Canaria, by a consortium including Ocean Sun and Fred Olsen Renewables. As the prices continue to drop for the technology, the country’s new targets mark a clear policy shift in favour of renewables. With its strong foundation for development and future opportunities arising through other technologies, Spain is expected to hold its crown as the leader of solar PV and be a huge driving force in the growth of not only the European but global PV market too. Sharanya Kumaramurthy Energy Analyst sharanya.kumaramurthy@the-eic.com
Designed and published by the Energy Industries Council 89 Albert Embankment, London SE1 7TP Tel +44 (0)20 7091 8600 Fax +44 (0)20 7091 8601 Email info@the-eic.com Web www.the-eic.com @TheEICEnergy EIC (Energy Industries Council)
