Montel Magazine 4 - 2020 - Page 29

“ It is undeniable that [ the government ’ s green tender plan ] will damage the PPA market , but we believe that there will continue to be business especially for corporate consumers ”
It is little surprise that solar power is thriving in Spain , a key holiday destination for northern Europeans looking for a warmer and sunnier climate . Spain has the third biggest green capacity in the EU with more than 40 GW after rising more than 30 % since 2017 , mostly solar . But the pace of construction will have to accelerate to meet the country ’ s 2030 goal of reaching 100 GW as part of its national energy and climate plan , prompting the government to plan annual tenders of at least 3 GW until 2025 .
The flipside of this growth is that the resulting increase in renewable generation will drive prices down , especially from 2022 onwards when tendered capacity starts to be connected , and will increasingly cut the profitability of future installations , say experts . And the Spanish PPA market , which has seen 7.5 GW of deals signed since 2017 , will compete with the likely cheaper alternative of tendered capacity , they say . Green capacity auctions involve risks that wholesale prices will fall , but “ we hope that as long as the government sees that the market is sufficiently active [ in achieving the 2030 goals ] it will not have to intervene so much ” says Pablo Borondo , analyst at the consulting firm Aurora .
There is consensus amongst the country ’ s large utilities that Spanish wholesale power prices will climb to around EUR 50 / MWh by 2025 , as demand increases in the aftermath of the pandemic and as gas and CO2 prices rise . This is overly optimistic , say experts , pointing to current prices of around EUR 40 / MWh and EUR 42-43 / MWh prior to the Covid-19 pandemic , which dented demand and lowered prices
Montel Magazine 4 – 2020