Market News

Spain’s national grid paves the way for the country’s energy transition

22nd October 2019

In the last issue of the QE newsletter, we highlighted the growth that we expected to see in the PV industry across Spain over the coming years. In particular, at the point of writing of the last issue, Spain was about to hold a general election that we thought would define the fate of the proposed Climate Change and Energy Transition Law. If implemented, this law would see 100% of electricity in Spain sourced from renewables by 2050. As this latest issue of the QE newsletter is published, we once again find Spain at the precipice of another general election. Despite the ongoing political limbo, the momentum towards clean energy has continued.

The Unión Española Fotovoltaica (UNEF) – The PV association of Spain – predicted that huge new development would be required for Spain to reach these ambitious targets. Its 2019 annual report states that “in the next decade, considering the target scenario of the National Energy and Climate Plan…around 2.8GW per year of photovoltaics must be installed to reach the 37GW planned for 2030.” So what steps have been taken towards this so far?

Some of the biggest progress so far has been seen in the Spanish National Grid or the Red Eléctrica Española (“REE”) which has declared its support for the country’s energy transition by committing to huge investment over the coming years. REE has promised to spend €3.2bn between 2018 and 2022 to expand the high-voltage transmission network. Nearly half of this – €1.5bn – is specifically intended to be used for the integration of renewable capacity through new interconnections and access points.

This commitment came amidst warnings that the existing system would not be able to cope with all the new capacity that is being planned and in particular the capacity that will be required to grow renewables to the extent required by current European targets (32% carbon-free energy by 2030) as well as the proposed new law. REE points to various projects that are planned or that are already in execution phase that it believes will both widen and strengthen the grid, such as the new interconnection between Spain and France via the Bay of Biscay. It claims that many of these projects will be decisive in achieving EU energy and environmental objectives. Facilitating the energy transition is the first of five pillars that make up REE’s 2018-2022 strategic plan.

Developers have not wasted any time in reacting to REE’s plans. Reuters recently published an article stating that the rush to secure grid rights in Spain has been so massive that “if all the permits requested from grid operator Red Electrica so far were translated into real projects, Spain would have enough renewable power to run 84 million households, four times the country’s actual number of homes”.

As there are a limited number of grid connection points, there are concerns in the industry that these rights are being bought on a speculative basis with the intention to later sell them on, resulting in calls for tighter regulation. So far, the government, acting in its capacity as caretaker government, has not been in a position to introduce any regulation in the area but depending on the results of the general election, this may soon change.

Aside from grid reinforcement measures, the Spanish government will hope to utilise public spending and auctions in order to grow the renewables market. The current government’s energy transition roadmap sees a fifth of general budgets being used for the low-carbon transition and estimates that it would use approximately €236bn between 2021 and 2030 in this area. €125bn of this amount would be dedicated to renewables and grid upgrades. Auctions would continue under a new scheme that guarantees a fixed price for all power generated. Current plans foresee an annual minimum target of 3GW to be auctioned, which ties in with UNEF’s expectations.

QE are continuing to monitor the Spanish renewables sector carefully and expect to be at the forefront of PV development in the market. Whilst there is some political uncertainty, there has been huge movement in the market during 2019 and we expect this to continue to grow in the coming years.

QE provide construction management and asset management services in Spain and across Europe. If you are interested in this or in PV development in general in Europe, please contact us via the enquiries section of our website.


This article is written and edited by Shirine Azzi. She can be contacted at: shirine.azzi@quintasenergy.com

 

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