The Spanish solar market has been reactivated, but not all projects with grid connection authorization will be built.
Spain connected more solar power to its grid in the first nine months of 2019 than in the past 10 years combined.
The published data by grid operator Red Eléctrica de España (REE) show that so far this year some 1,541 megawatts of solar photovoltaic energy have been connected to the grid.
Spain experienced a subsidy-fueled solar boom at the end of the last decade before suffering a dramatic crisis. Changes in state policies and laws to avoid self-consumption decimated the sector in 2013. The country ended 2018 with around 6 gigawatts of installed solar capacity.
A combination of government-backed auctions and non-subsidized development, in addition to solar self-consumption, has triggered a new phase of growth. The auctions have so far awarded contracts for 3.9 gigawatts of new solar capacity. However, some investors are speaking privately about their refusal to participate, given the nature of the policy changes in 2013.
Instead, many are looking for alternative routes to the market, including power purchase agreements.
Wood Mackenzie plans to install more than 2,500 megawatts in Spain in each of the next five years.
Most of what is built in Spain in 2019 comes from the portfolio of projects that were awarded in the revolving auctions of July 2017 – the deadline for interconnection is the end of 2019.
Tom Heggarty, Wood Mackenzie Solar Analyst.
In addition to this, there is a significant portfolio of projects that develop outside of public subsidies, either to sell energy on the wholesale market or for those that receive it under bilateral public partnership agreements. -private.
Massive interconnection queues.
BayWa redeveloped Europe’s first large unsubsidized solar project with its 175-megawatt parent Don Rodrigo, establishing a framework that many projects will attempt to replicate. After accepting a 15-year PPA with the Norwegian company Statkraft, the project was sold to an institutional investor. BayWa re has entered into a 12-year agreement with Statkraft for a second phase of the 50 megawatt project. The work should be completed before the end of the year.
The promoters have built a large portfolio of projects seeking to connect to the grid in Spain, and the sector is aware that there is a limit to the number of projects that can go forward. REE says 81.7 gigawatts of wind and solar project proposals have been authorized for the connection, while another 57 gigawatts are pending approval.
Considering the self-consumption and distributed solar installations, Wood Mackenzie expects almost 20 gigawatts of Spanish solar capacity to be installed during the period 2019-2024. Three quarters of this amount will go to public services.
The main challenge in bringing these projects to market is obtaining grid connection agreements. The sector has been the subject of much speculation, as the developers have acquired grid connections without electricity or without the intention of developing projects with them.
To curb speculation, the Spanish regulator at the end of last year raised the cost of a guaranteed grid connection from 10,000 euros ($ 11,005) to 40,000 euros per megawatt. And in recent weeks, REE has canceled 26 gigawatts of grid-tie applications, of which 20 gigawatts were for solar projects, Heggarty said.