Growth in the Spanish solar market exceeds expectations
Feed-in tariffs in Spain, initiated in 2004 to reach the European Union’s goal of increasing renewable energy use to 20 percent by 2020, guarantee energy produced by from renewable resources will be bought by local utilities at three times the normal market value for 25 years. The Spanish utilities have the obligation of giving renewable energy companies a connection point to the grid.
According to Reuters, these incentives have been instrumental for the growth of photovoltaic solar power plants in Spain, that is exceeding the government’s expectations. With the current momentum, Spain will be over its target for 2010 of 400 megawatts (MW) of photovoltaic (PV) power by next summer. By that time, the actual installed capacity might be somewhere between 800 MW and 1,200 MW, according to the Ministry of Industry.
At 1,200 MW, PV power would still only account for 0.4 percent of total power, so there is still a long way to go. Another weak spot in the market is the low penetration of small installations in homes, with big plants – from one to 25 megawatts – being far more typical.
Industry Ministry officials said that once there are 1,200 MW of PV solar power, the tariff rate will be reduced by 5 percent each year. Investors and politicians are optimistic that in six years the incentives will no longer be necessary. Costs are expected to fall as competition spawns cheaper, more efficient solar technologies allowing firms in the sector to sustain themselves at normal market prices, they say.
But it is not just photovoltaics, the solar market is expanding accross the board. In the last months, we have seen a non-stop string of announcements of projects and deals:
Deals and solar plants:
Who: Sunpower Corp. (PV, US), with financing from AIG Financial products (US) and 360 Corporate (Spain)
What: 18-megawatt solar electric power plant
Where: Olivenza (Badajoz province, Extremadura)
Generation: more than 32 million kilowatt-hours of power per year
Who: ICP Solar Technologies Inc. (Montreal, Canada)
What: agreement to provide US$ 770,284 in solar modules to Tejasol (Spain) in Spain, with a view to open offices in Madrid and pending orders amounting to US$ 18.5 million.
Who: Solel Solar Systems (Israel) and Sacyr-Vallehermoso Group (Spain)
What: agreement to build three solar thermal power plants
Total capacity: 150MW
Investment: US$890 million
Who: Solar parks of Extremadura, formed by Ecoenergías (Spain) and Deutsche Bank (Germany)
What: 40 MW solar plant by the name of Merida Solar 2008
Investment: 300 million euros (430.6 million dollars)
Generation: 72,3 GWh per year (for the needs of around 80,000 people, approx.)
Where: Valverde (Extremadura)
Manufacturing plant openings and expansions
Who: Schott (solar panels and solar receivers, Germany)
What: a manufacturing facility for solar receivers (their second in Spain)
Where: Seville (Southern Spain)
Investment: approximately $28 million
A telling fact of the rapid expansion of the solar energy industry worldwide is how several of these companies have almost simultaneously announced parallel projects in another hot market, the United States. For example, Solel is developing the Mojave solar park for PG&E, a huge project (553 MW) and Schott (as recently covered) is also opening a US plan in California.