solar thermal electric

Sun rises in Spanish power sector: Renewables go up while emissions and electricity prices go down during first half of 2009

Heikki Willstedt, Energy Expert for WWF Spain, recently released her analysis of the Spanish power sector, finding that renewables have continued to grow, with solar power making particularly significant ground.

In the midst of a heated political and social debate about the future of the oldest and smallest nuclear power station in the country, renewables in Spain have continued to grow and have achieved a 29% share of the electricity market during the first half of 2009 (just 1% point from the national 2010 objective set by the EU). In 2005, this figure stood at just 18%.

Heikki Willstedt considers that “the most remarkable aspect of this important growth is that this year, solar power has grown to become a significant force in the power sector”. By the end of June, more than 2% of the electricity delivered to the grid was produced from the sun’s rays. On a sunny summer day, solar power can generate up to 5-7% of the power required by the system; just when the air conditioning systems are taking the demand curve to its peak.

Emissions down

Even if the first half of 2009 has not been exceptional in terms of rainfall, which always help to reduce emissions by allowing for more hydro production, the combined contribution of more production by other renewable energies and the decrease in power demand (-6.4%) has achieved a remarkable reduction in carbon dioxide emissions by the electricity sector, which have fallen by 36% compared to 2005.

And prices down too

The market price of electricity has gone down by 34.5% compared to the first half of 2008 and 30% compared with 2005. Several factors are responsible for this drop in prices: the economic crisis reducing power demand, the EU Emission Trading System Directive, new renewable capacity displacing the costliest power plants from the market, and to a certain extent the reduction in international prices of fossil fuels.

Some clouds on the horizon

Despite the headway made by renewables, Willstedt reports that there are a number of factors that could impede renewables growth in the future.

Firstly, the financial crisis is having a significant impact on investments in renewables.

Secondly, as a result of over-capacity of the electrical system (as mentioned, the crisis has reduced demand by more than 6%), brand new gas fired CCGT installations are not operating the expected hours, thus making them less profitable. If more renewable technologies are installed, these CCGT installations could become a serious financial problem for electricity utilities: the same utilities that are investing in RES.

Finally, an accumulated deficit (>20.000 M €) exists in the power sector (during the last five years, revenues have not covered the costs of generating, transporting and distributing electricity, with the Government expected to pay back the deficit to utilities over the next fifteen years). Most of the deficit is due to the fact that the electricity prices set by the Government are too low to cover costs. Part of this deficit has been attributed to the renewables sector. However, if energy imports and the carbon dioxide emissions avoided by renewables are taken into account, these technologies have actually saved money for the national economy.

The future

Willstedt is confident that the EU 20-20-20 target will ensure continued support by the Spanish government for the renewables sector. The objective is 40% for the Spanish power sector, although several experts believe that 50% is possible if demand is curbed through energy efficiency measures.

The fact that most utilities have considerable amounts of wind power makes them “interested parties” in maintaining the actual support system and improving the management of the contribution by wind power to the electrical sector.

The fact that renewables made in Spain are making a significant contribution to the countries economy, creating wealth and job creation, has not gone up detected by the Spanish government, which intents to make it one of the pillars of the recovery of the economy. The messages that the US president is giving out regarding the energy issue and the importance of renewables have also reinforced the Spanish government’s resolve. Currently, the Ministry of Industry is preparing a National Renewable Plan identifying the potential of renewables up to 2030.

If power demand rises 1.6% yearly in the period 2010-12, with current sector scenarios, renewables could cover 31% of expected demand by 2012. If power demand rises by only 0.5% during the same period, this could rise to 32%. Emissions by the power sector would be 4.4% lower in the second scenario.

By 2012 there could be 2,000 MW of solar thermoelectric technology installed, in addition to the 3,200 MW of PV already functioning. As a result of these two technologies, solar power could be producing 8,000 GWh equivalent by 2012 or 3% of total expected demand.

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