The elimination of "economic incentives" in Spain that had been available for renewable energy projects until 27 January (the feed-in tariff) does not appear, therefore, to have discouraged the major players in the Spain’s solar industry. Indeed, in Murcia alone, the regional government has registered projects totalling 4,000 megawatts.
With this in mind, is grid parity in Spain on the cards for 2015 or 2016 perhaps? "I think we've got it a lot closer," says Guillermo Barea, CEO of Gehrlicher Solar Spain, which is leading the project that aims to become the first PV plant in Spain to send power to the grid without earning a feed-in tariff: Talasol, in the municipality of Talaván in Caceres, which has a nominal capacity of 300 MW.
The project was announced just six weeks ago in Merida at the seat of the Regional Government of Extremadura, where Barea highlighted that Gehrlicher has already acquired the necessary land, and approval from Red Eléctrica de España (REE, the Spanish grid operator). REE has assigned the company a power evacuation point and an agreement has finally been signed with the Regional Government of Extremadura entitled "Administrative Procedures Advisory Protocol" by which the regional government undertakes to provide Gehrlicher with all the necessary permits.
Parity in 2014
Barea is one who estimates that grid party in Spain will arrive in 2014, not in 2015 or 2016. "I have a year and a half to work on Talasol. We have begun to work very hard with the Government of Extremadura, have already met twice with the Director General of Industry who has confirmed their interest, and are now sitting down with everyone – the banks, investors, large utilities… even utilities in other countries, which have called to inquire about the project. It is also still possible that PV system costs may be further optimised. In short, I know that with the possibilities being generated by this project and the people interested in it – people from Spain and abroad – a year and a half is quite feasible "(it is planned that Talasol will start sending power to the grid, without earning a feed-in tariff of course, in 2014).
In 38 days
However, Jorge Morales de Labra, a board member of the Spanish Photovoltaic Union (UNEF), does not feel the same: "Grid parity... we estimate... can be achieved in Spain... in a period of four years". That said Morales de Labra stresses that: "Anyway, this is only a forecast… furthermore, so far we have not been wrong because we have always gone faster [in terms of cutting costs] than we anticipated. Although it is also true that, until now, there has not been a stoppage in production as is being experienced [in Spain] currently". According to UNEF, the halting of production is solely due to the moratorium on feed-in tariffs introduced by the Spanish government through a Royal Decree Law (RDL) only 38 days after Mariano Rajoy was sworn in as President. The decree, however, does not seem to have affected multinationals to the same extent as SMEs.
No feed-in tariffs, no SMEs?
The Association of Renewable Energy Professionals of Catalonia (Aperca) has been very clear from the beginning. In a statement released in early March, it stated that the "abrupt and indefinite" suspension of feed-in tariffs for renewable energy facilities established by RDL 1/2012 adopted on 27 January will lead to "a dramatic shutdown of Catalan photovoltaic solar energy businesses". According to Aperca, the Catalan sector is characterised by "a substantial number of small and medium-sized enterprises". Moreover, Catalonia is "the most active region in terms of installing small PV facilities (less than 20 kW) on buildings". Consequently, according to this association – one of the oldest in the solar sector in Spain – the RDL will result in "the disappearance of a number of companies and skilled jobs".
At the opposite end of the scale, macro solar arrays are appearing everywhere. At least on paper, as projects. "Uncertainty in the Spanish electricity system is very high. Of course, I think that starting a project in an unstable situation is highly risky. I'm not saying it is not possible. Maybe it is. But at this point, it is very risky," says Morales de Labra. As such, the conclusion he reaches is somewhat bitter sweet: "We very much hope that all these projects come to fruition. I would be delighted. It would be spectacular news for PV to announce from the rooftops that it can compete even with externalities. But unfortunately, I don’t see this as the case. I have not heard anyone say that they have obtained financing to date. And... that is damaging".
Damaging developments
Damaging? "Yes. I will not hide the fact that, today, what most concerns us of all these developments is that the Government might get the message that plants can now be built without feed-in tariffs and that therefore, nothing needs regulating in the PV sector. We are concerned that the Government might believe that the PV industry can compete with traditional technology directly in the electricity pool. I worry because, in the end, that will damage the sector. It will damage it to the extent that in the end, the Government may listen to these proposals and not consider any other".
The next question then is clear. Does UNEF have any other proposals? Morales de Labra makes it clear that: "we do not like the feed-in tariff concept, we would be more comfortable with a fixed rate model which recognises that the cost of photovoltaics is what it has to be. If we look at the final round of tariff allocations last year – which was the last to be published – you know it was twelve cents. It seems reasonable to say then that every kilowatt of PV costs twelve cents. And that the same should be done for nuclear and hydro and gas plants. Then, surely, they will not put in bids at 5.5 cents. They will probably bid at nine or ten. And then, we would really see what level each of these technologies have".
In any event, Morales de Labra stresses that UNEF does not know anything about the multi-megawatt PV projects. "We know nothing more than what appears in the press; no one has made any proposals for us to support them as an institution or anything. This surprises me a lot, because in many of these news reports, the framework under which these plants will work is not defined.” One possibility that has been tabled is to become independent of the Spanish electricity pool, i.e. you generate in Murcia and sell the electricity to a German retailer.
"That, today, is fiction," replies Morales de Labra. "That does not underpin a business plan. It does not stand up under even the most basic of sensitivity analyses, because the electricity interconnection between Spain and France, which would have to be used under such a model, is very limited. Bear in mind that, at best, we are exporting around 1,400 MW of peaks in output of 45,000 MW. Thus, we have an absolutely ridiculous export structure."
REE reveals 9,000 MW under analysis
Nevertheless, REE has confirmed that grid connection requests for 9,000 MW of proposed PV projects have been submitted and at various stages of analysis. The government of Murcia (as noted at the beginning) has revealed that projects totalling 4,000 MW have been submitted to it. Sources at a leading photovoltaic company told this reporter that it has submitted connection requests totalling 800 MW, and already obtained approval for 500 MW (in just one company).
Meanwhile, a spokesman for another firm that also prefers to remain anonymous for now, said to Renewable Energy Magazine: "Look, it won’t be possible to see even a single tree in Murcia given all that is planned, and I know than many requests have been submitted for many megawatts in both Extremadura and Castile La Mancha, although it is also true that many have been submitted by engineering firms, which could begin to speculate with this type of access points and then sell them more expensively to us [solar firms]".
[Editor's note: This article is a translation of an article published in issue 111, of Energías Renovables, our sister publication in Spain. It was accompanied by an interview with the Director General of Industry, Energy and Mines of the Region of Murcia, Pedro Jimenez Mompeán.]
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