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Solar power leads way for a rise in renewable energy in Spain and the Balearic Islands

By Alison Mungall
5th April 2020

The climate in Spain seems ideal for the use of photovoltaic solar panels. But Spain’s renewables market, at one point among the largest in the world, has seen years of inaction. The lack of investment in renewables in recent years means that Spain now faces an uphill struggle to meet its European renewable energy targets. But solar power is currently leading the way for a rise in self-generated renewable energy in Spain. The 80% drop in the cost of the technology over the past 10 years is the main driver for the upward trend, together with regulatory reforms in Spain and the European Union’s renewable energy drive.

The 2018/19 regulatory reforms
The previous government replaced a generous feed in tariff (FIT) scheme in 2013. This was widely criticized by developers and investors. This system would have produced a fall in income of about 42% in value, from 7.39% percent to around 4%.The Socialist (PSOE) government replaced the scheme by new regulations in April 2019.

Despite the pre-2019 system, demand for photovoltaic solar panels has soared recently and is currently leading the way for a rise in self-generated energy in Spain. Installed capacity grew for the second year running in 2018 with a 94% increase from 2017. 90% of that was self-generated. José Donoso, managing general of Spain’s Photovoltaic Union (UNEF), believes the 80% drop in the cost of the technology over the past 10 years is mainly responsible for the upward trend.

Up to now, a significant part of the growth is taking place in the agricultural sector. Around 25% of self-generated energy schemes in 2018 were linked to irrigation, according to UNEF. “It is now cheaper to install panels with batteries than a diesel engine, according to José Donoso. Most of this extra power is being demanded by small and medium businesses because they can produce and consume energy simultaneously.

End of policy uncertainty
In 2018, the prime minister merged environmental and energy affairs into a single government department for ecological transition. Its head, Teresa Ribera, has led moves to end longstanding regulatory uncertainty surrounding renewable investments. Royal Decree-Law 15/2018 contains the reformed regulatory framework for self-consumption. It also eliminated the so-called sun tax to provide certainty for energy ‘self-consumers’.

The latest Royal Decree includes the following new measures:

  • The regulations define different types of self-consumption. Now, collective self-consumption is defined in such a way that several consumers can be associated with the same generation plant, a development that will promote self-consumption in residential and industrial communities.
  • The regulations simplify the mechanism of payment for any surplus energy injected into the grid.
  • The decree licenses all power distribution companies to offer renewable energy self- consumption.
  • The new provisions also reduce administrative procedures for all ‘prosumers’. Small self- consumers – installations of up to 15 kW, or up to 100 kW for self-consumption without surplus – will face just a single procedure.

 

The PV industry has endorsed the government’s initiative, as the decree makes self-consumption a simpler process and it remunerates enterprise. It increases the potential for solar PV for housing estates, shopping centres and industrial parks.

2020 proposals

On 21 January 2020 the government declared a “climate emergency” and produced a draft bill on transitioning to renewable energy, “to reduce greenhouse gas emissions with the objective of reaching climate neutrality by 2050” — effectively net-zero carbon emissions.

Prime Minister Pedro Sánchez’s left wing coalition government also committed to updating the national plan for tackling climate change. The government pledged to achieve a 2030 target of 35 percent renewables in the final energy mix and 74 percent in electricity generation. The manifesto also calls for 100% of electricity to come from renewables by 2050.

Although Spain’s minority coalition government is committed to renewables, it does not have the support of parliament (Prime Minister Sánchez failed to secure the Parliament’s support for his 2019 budget). Therefore, the proposed reforms on renewables announced in 2020 may not take place.

 

The Balearic Islands: the Clean Energy for EU Islands Initiative
At EU level, Clean Energy for EU Islands Secretariat has been put in place to help facilitate the transition to renewable energy and provide resources to 26 islands in the EU, including the Balearic Islands.

The Clean Energy for EU Islands is an agenda to help islands exploit the renewable resources at their disposal. The transition to renewable energy and encouragement of self-sufficiency will hopefully bring jobs and opportunities to the islands as well as decreasing their dependency on imported fossil fuel.

The Balearic Islands
Currently, solar PV accounts for only around 2% of the Balearic Islands energy supply. There is a push from Balearic policymakers to increase this, in line with the broader Spanish industry revival, driven by grid parity and strong power prices.

A plan by Spain’s Balearic Islands to switch to 100% renewable energy became law in January 2020. Under the new law, the regional government intends to meet the energy demands on Mallorca, Menorca, Ibiza and Formentera by 10% renewables by 2020, 35% by 2030 and 100% by 2050. The new law includes the following:

  • New parking sites larger than 1,000 sq m will have to install rooftop panels PV incorporation will also be mandatory for new constructions covering 1,000 sq m or more
  • The new PV requirements sit alongside other climate change pledges, including the shutdown of fossil fuel plants from 2020 onwards and greenhouse gas-curbing goals for 2030 (40%) and 2050 (90%).
  • The set-up of 1,000 EV charging points by 2025 in a bid to fully decarbonise road transport by 2050.
  • The regional government will “exceptionally” consider exemptions

After first announcing their plan last year, Mallorca, Menorca, Ibiza and Formentera will now work towards a 100% clean energy system by mid-century, phase out diesel cars and shut down Mallorca’s coal power plant, both by 2025.

It is not only the Spanish climate which is ideal for the use of photovoltaic solar panels. There is also political will at both national and regional levels. In 2019, Spain reclaimed the position as Europe’s largest solar market — 11 years after last taking the top spot. However, although Spain’s minority coalition government is committed to renewables, it does not have the support of parliament. In addition, the priority is currently measures to slow the corona virus outbreak. Further proposed reforms on renewables may not take place for some time.

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