12 March 2020


PPA Data analytics Spain

The State of Spanish Solar: From Speculation to Realization

Author: Marco Dorothal

Amongst all the hype and rumors, Spain crushed all speculations by installing 4 gigawatts (GW) of solar photovoltaic (PV) capacity in 2019, an all-time record for the Southern European country. According to Red Eléctrica de España, most of the capacity installed - about 3.7 GW - came from the auctioned projects, while the rest of the capacity came from merchant projects. This caused Spain to become the fastest growing European solar PV market, a position the country has not held since 2008 when the first solar boom happened. Besides auctions and merchant projects, there are other factors that have contributed to Spain’s impressive comeback.  

Sunshine in a bottle

Since the arrival of market parity, solar projects backed by bilateral power purchase agreements (PPAs) have been popping up all over Spain. In 2019 alone, Spain signed around 4.4 GW of solar PPAs, making it the largest European PPA market for solar PV plants. 

At the start of this year, one of the largest corporate solar PPAs in Europe was signed between German renewables developer BayWa r.e. and AB InBev, the brewer of Budweiser and a line-up of other well-renowned beers. The 130 MW solar energy deal will supply enough electricity to power 14 of AB InBev’s breweries in Western Europe, a major milestone for corporate solar PPAs. 

The deal has raised many questions regarding the replicability of such contracts. Patrick Schmidt Bräkling, C&I Origination Manager at BayWa r.e., commented on the deal by stating: “The main takeaways are that if corporates want to achieve their renewable energy goals (e.g. 100% renewable energy sourcing by 2023), meaning a high volume and at the same time within a short time frame, a Pan-European virtual PPA is (the only) feasible option.”

And this is just one of the many solar-linked corporate PPAs being signed now in Spain. In February, Heineken announced that it signed a long-term PPA with Iberdrola for solar-powered green electricity. Four of Heineken’s breweries in Spain will be powered by a 50 MW solar park in Andalusia, which is expected to come online later this year solely to power Heineken’s operations.  

It is interesting to note that both AB InBev and Heineken are aiming to make the transition to 100% renewables, together with other giants like Google and Amazon. At the end of 2019, it was announced that Spain will host Amazon’s 149 MW solar power plant, which will be located southeast of Seville. The plant will power Amazon’s Web Services Data Centers and logistics locations, as part of the company’s switch to 100% renewable energy by 2030. 

The Spanish solar energy market has proven to be the best suitable host for these corporations to reach their clean energy targets. A low levelized cost of electricity (LCOE), market parity prices and the availability of land and solar resources are some of the reasons for the attractivity of the market. This has led to a surge in unsubsidized projects, which has also played a role in the rise of PV in Spain. 

The subsidy-free scene

Having governmental support is always important for a solar energy market. Ideally, though, the market should be able to run by itself, with governments only playing a supervisory role. This is where subsidy-free solar projects come into play. 

Aside from being home to Europe’s largest unsubsidized solar project - the 175 MW Don Rodrigo solar plant - Spain currently has a pipeline of multiple GWs worth of solar projects. The surge of unsubsidized solar projects in this country has raised many questions on how these ‘unsubsidized solar business models’ could be exported to the rest of Europe. 

“Solar in Spain is now commercially feasible all over the country, whereas the first projects developed and built were only located in the Andalusian region,” says Juanjo Álvarez, Head of Solar Development Spain & Portugal at BayWa r.e.

According to Álvarez, subsidy-free projects are a natural evolution for a solar market. He believes that the experience that sunny countries provide to different stakeholders across borders will lead to a drop in development, construction and operation costs. Therefore, making it easier for these large-scale unsubsidized solar projects to take place all over Europe.  

Barriers for solar

Despite the growth of corporate PPAs and unsubsidized projects, there is still quite some speculation surrounding the PV market in Spain due to the ever-increasing grid access requests. 

Álvarez believes the main project development bottleneck in Spain is clearly related to the grid access process. Many players have focused on reserving feed-in capacity without really having a realizable project behind them.

 “This leads to speculation, which BayWa r.e. is not willing to entertain. We focus on real projects, either developed by ourselves or by third parties, with a clear location and with demonstrable progress,” says Álvarez. 

When asked about the changes that are needed in the current regulation, Álvarez states that he expects Spanish regulators to intervene and approve measures that will force those speculators to release the capacity to companies really willing to develop and build projects. 

Furthermore, Álvarez thinks that the focus should go in the direction of (1) granting grid access to companies with a proven track record who present real projects and (2) more transparency in the grid connection process in terms of visibility on where PV can suit the grid and foreseeable timeframes in order to process applications.

What’s next for Spain?

The future might be hard to predict, but it sure looks bright for solar PV in Spain. With a pipeline of over 70 GW of approved PV projects, the country is looking to connect massive amounts of solar capacity in the coming years. This could happen in the traditional form of solar power plants, or also in other, less conventional methods. 

Toni Weigl, Project Manager at BayWa r.e., notes that apart from PPAs, floating PV is another  interesting concept that can be realized and marketable throughout the whole of Spain. “In a land of water scarcity, Floating PV can actively help against water evaporation and the cooling effect of the water improves the solar modules efficiency,” says Weigl.  

In conclusion, the activity in Spain’s solar sector is at an all-time high.  Headlines like “Another solar PPA in Spain'' or “Massive unsubsidized PV project comes online in Spain” are now a common occurrence. Indeed, there are quite some challenges present in the market, especially regulatory ones. But, it is safe to say that Spanish solar industry is on the right track. After a record-breaking year, Spain positioned itself as Europe’s leading solar energy market. Only time will tell if it will be able to keep its position as the continent’s solar hotspot, or will history repeat itself?

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