Spanish Developer Plans 3.3 Gigawatts of Subsidy-Free PV Farms
A Spanish photovoltaic energy developer is planning to install 3,325 megawatts of capacity by the end of 2023 with no support from public funding, taking advantage of a boom in the country’s solar market.
Madrid-based Solaria Energia y Medio Ambiente SA’s projects “are completely subsidy-free and can compete in the market with other technologies,” Chief Operating Officer Dario Lopez said in an interview. “Nowadays, there are lenders that are assuming the price volatility linked to the merchant risk. This kind of projects are already a reality, we’ve reached the green parity.”
The 250 megawatts the company was awarded in a renewable public auction in 2017 can count on compensation if the market price of electricity falls below 32 euros ($36) a megawatt-hour. But only a “destructive” price scenario would trigger that mechanism, Lopez said. “So it’s like having no subsidy.”
Spain turned into one of world’s most-attractive solar markets a decade ago, when generous incentives lured developers and boosted the industry. After a slow down following the government’s decision to cut subsidies that were draining the country’s finances, a decrease in costs has allowed the solar market to return to growth, this time without public support.
Spain has a pipeline of 7,000 megawatts of subsidy-free PV solar farms in the works, the most in Europe, according to a report by BloombergNEF. The country also has 61% of the subsidy-free power-purchase agreements that companies sign with renewables operators, locking in electricity prices for both producers and consumers.
Trade war winner
A plunge in the cost of developing solar farms underpinned the boom and has been further helped by a trade war between the U.S. and China, said Lopez.
“It’s favoring us,” he said. “Chinese panel manufactures are getting bigger and bigger and cannot stop producing, so they have to reduce prices to sustain sale volumes when exports to certain countries are more difficult. The fall of yuan is also beneficial. Prices of certain component have dropped as much as 10%.”
Spain is an “exceptional market, an unique opportunity in the world,” said Lopez, noting that Solaria also plans to further expand in other countries.
“Once we’ve all our 3.3 gigawatts installed, we should have impact on the share price,” the executive said. “We’ll focus on other markets where we already have certain experience, mainly in Latin America.”
The developer also aims to keep growing in Portugal, where it has been awarded 50 megawatts in a public auction. It also plans work in Italy and doesn’t rule out issuing bond to fund future projects, Lopez said.
©2019 Bloomberg L.P.