Spain's PV sector calls for stable industry-based strategy

Spain's PV sector group Union Española Fotovoltaica (UNEF) is calling for a stable and industry-based national strategy for the sector to manage an expected Eur20 billion investment and create a viable PV hub in line with initiatives laid out in the European Green Deal.

UNEF said in a report in sent to the government Thursday that its reindustrialization plan would include manufacture, export and digitalization of the sector in a strategy targeting the country's 2030 goals from its National Energy and Climate Plan.

"The errors of the past must be avoided, and the development must not be in the form of a bubble and then years of inactivity," UNEF said. "If the development is stable and it is accompanied by the right measures, it will create a technologically strong industrial complex."

"The main role of the power sector is to provide constant demand for the stable development of new capacity," the group said. This would mean support for a centralized auction mechanism to assign new capacity as well as reform of the current grid connection mechanism and other administrative procedures, it said.

Spain was an early mover in the 1990s in the PV market, but has witnessed a hugely unbalanced development, resulting in 86% of its current 8.9 GW installed capacity being put in place during two boom years, 2008 and 2019, both of them caused by regulatory deadlines.

Under UNEF's plan, it would target a stable annual growth of 2.8 GW in order to meet the 2030 national target of 39.2 GW of installed capacity.

This would be supported by development of the country's industrial capacity, Spain having previously been a market leader with 50% of global solar panel production in the early 1990s.

This would dovetail with the European Green Deal proposals for an emissions-free and circular economy that creates regional employment, UNEF said.

Investor lure

Sun-rich Spain has always been a lure for international investors. Prior to the coronavirus pandemic, Spain's PV sector was inundated with a huge boom in grid applications, with more than 90 GW currently in process, many from international operators lured by grid parity and a booming opportunity for power purchase agreements.

The need for international companies to go carbon-free has driven both the PPA market and interest in Guarantee of Origin Certificates.

The power purchase agreement market was thriving prior to the pandemic, with deals getting done on a weekly basis between Eur40/MWh and Eur42/MWh compared with an average wholesale pool price of Eur43.63/MWh for H2 2019.

However, this has eased off in the last two months after wholesale prices fell back to an average of Eur17.65/MWh during April, with only a limited recovery in May to Eur17.92/MWh, while industry and government policy is only slowly restarting as the country moves out of its nationwide lockdown.

Meanwhile, the market for Guarantee of Origin Certificates has also been a strong driving force for the PV market.

According to a report issues last week by the Spanish regulator (CNMC), Spain's guarantee of origin market covered 89.3 TWh of renewable generation in 2019, supported by interest from new entrants into the sector such as oil companies Repsol and Cepsa and international groups looking to get carbon neutral by 2050.

Of note, around one quarter of Guarantee of Origin Certificates generated in Spain during the year were exported, with the figure in the PV market lagging behind the overall quota, with 11% from the 7.2 TWh issued destined for export, according to CNMC.