The Spanish solar market is exposed to the risk of overinvestment by 2030



New data from Afry Management Consulting suggests that Spanish solar power producers could face prices below €20/MWh before 2030 if the penetration of renewable energy sources continues to grow. Such low prices would make power purchase agreements (PPAs) and trade projects unprofitable.

The event organized by Afry Management Consulting analyzed the consequences of the closure of Spain’s nuclear power plants and discussed the possible utilization of solar and wind energy to compensate for the loss of capacity.

There are currently 60 GW of large renewable energy projects approved, and Spain’s solar confederation UNEF has called for an upward revision of the country’s energy strategy to enable an additional 65 GW of capacity to be commissioned by 2030.

If the current rate of deployment continues, the installed capacity in 2030 is projected to be 75 GW, exceeding the predictions of the current energy strategy. Solar is expected to exceed 50 GW, while wind power may not reach 40 GW due to hurdles in the approval process.

In Afry’s modeling, in the extreme scenarios, the difference in solar energy yields between the moderate renewable energy sources and the high battery penetration scenario and the high renewable energy penetration scenario would be almost 40 euros/MWh, while the latter drops below 20 euros/MWh from 2025.

The consulting company emphasizes that there are many launched projects whose realization is uncertain and that the high renewable penetration scenario has less installed solar power capacity in 2030 than the new goals proposed for the energy strategy.

In terms of storage, Afry suggests that up to 17 GW, including pumped water, would be viable, but would require installation incentives. In the basic scenario, the consultant estimates 3-4 GW of electrolyzers connected to the grid by 2030.

When solar prices fall, producers’ incomes fall, making power purchase agreements (PPAs) impossible if retail prices fall below the levelized cost of energy (LCOE). Only the government would be willing to pay prices higher than the market price in such a scenario.

An early shutdown of nuclear power plants would increase dependence on gas-fired power plants, leading to higher prices and increased volatility. It raises the question of whether to prioritize greater renewable energy production with higher emissions or delay the shutdown of nuclear power to reduce emissions and slow the use of renewables.

A report on security of supply in the event of a nuclear shutdown has also been deemed necessary.

David is a passionate writer and researcher who specializes in solar energy. He has a strong background in engineering and environmental science, which gives him a deep understanding of the science behind solar power and its benefits. David writes about the latest developments in solar technology and provides practical advice for homeowners and businesses who are interested in switching to solar.

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