Spain’s Answer to High Power Prices Is More Renewable Energy
(Bloomberg) -- The Spanish government is moving to bring more solar and wind farms online after power prices soared to multiple records this summer.
Surging costs for natural gas and permits to burn carbon in the European Union are putting pressure on consumers just as the bloc’s economies struggle to recover from the pandemic. Spain plans to support 3.3 gigawatts of new solar and wind energy with the expectation that the extra supply will help drive down electricity prices.
Spanish power prices have increased this year due to a natural gas supply crunch. At the same time, Europe’s moves to cut emissions by the middle of century have helped push up the price of carbon permits — a fee that energy producers have to pay for greenhouse gas emissions.
The Spanish government said auctions for new green energy capacity will be accelerated to bring relief to consumers. “The objective is to continue auctioning renewable energy, to push for the transformation of the power system in an orderly manner,” Minister for the Ecological Transition Teresa Ribera told journalists on Monday.
The move underlines the continued competitiveness of renewable energy, despite a boom in the price of commodities such as steel and copper that has pushed up the cost of solar panels and wind turbines. Fossil fuels including gas and coal have also gotten much more expensive.
As is the case in nearly half the world, it’s cheaper in Spain to build new solar or wind farms than to run existing plants that burn fossil fuel, according to research from BloombergNEF. That differential is even greater when compared with building new polluting plants. The country’s power prices are set to fall by about 58% by 2025 as more renewable power pushes out gas generation, according to BNEF.
Spain is one of Europe’s fastest growing markets for renewable power. In the first half of the year, electricity generated by wind turbines increased by 25% compared with the same period last year, while solar rose 26%, according to data from research organization Ember. The more renewables come on the grid, the less the country’s consumers will depend on swings in fossil fuel prices.
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