Valueshore

Shortly after the second international oil crisis, Law 82/1980 on energy conservation was enacted, representing the start of the development of renewable energies in our country. Since then, comprehensive legislation has given rise to a sustained support framework for these sources of energy, which has boosted investor confidence and enabled developers and equipment manufacturers to procure the financing required to make significant investments and position “Renovables Made in Spain” at the top of the world league.

Electricity Sector Law 54/1997 deregulated the electricity market in Spain and established that 12% of primary energy demand had to be met using renewable sources by 2010. To this end, this law called for the preparation of a Renewable Energy Development Plan, which was approved in December 1999. The Plan analysed the status and potential of these energies and fixed specific objectives for the different technologies.

Stable framework

In 2005, when it became clear that this objective was becoming difficult to fulfil, the Government approved a new 2005- 2010 Renewable Energies Plan (PER) and an Action Plan to improve energy efficiency, in order to increase the speed at which these energy sources were being installed and curb rising energy demand. The 12% renewables share in relation to primary energy demand in 2010 was kept in the 2005-2010 PER and two new objectives were established for that year: 5.83% of petrol and diesel consumption by the transport sector to be satisfied using biofuels, and a minimum of 29.4% of gross electric ity demand to be covered by renewable sources.

Over the last decade, especially since 2005, renewable energies have made an ever increasing contribution in Spain, driven by a regulatory framework that has promoted development through stability. One of the keys to understanding the Spanish renewables success story is the support system that was selected. All nations understand that renewables are clean, primarily home-grown, and practically inexhaustible sources of energy, which frees them to a large extent from the price fluctuations suffered by fossil fuels that represent a real challenge for countries which are heavily dependent on external resources such as Spain, with an energy dependence of around 80%.

Feed-in tariff

Based on experience, it can be concluded that choosing the right economic support model is critical to successfully developing a renewable electricity generation system. Spain chose to support the sales price of renewable electricity by establishing either a fixed tariff (which differs from one technology to the next) or a premium paid on top of the market price for installations that opt to sell their electricity on the market. The scheme, commonly known as a feed-in tariff, is basically the same as that used in countries such as Germany or Denmark, which, along with Spain, have also successfully rolled out renewable energies.
 

These feed-in tariffs are justified by the strategic and environmental benefits offered by renewables and aim to guarantee reasonable returns on investments while learning curves and economies of scale gradually enable the various technologies to become competitive with conventional sources. Another measure taken by the Spanish Government to promote the roll-out of renewable energies that could prove to be crucial is the transport sector's obligation to use biofuels.

This measure, included in the 2007 Hydrocarbon Law and subsequently developed in 2008, establishes an obligation for all operators and distributors of petroleum products to demonstrate that a minimum percentage of their annual sa les are of biofuels. This measure is very recent and, while it is somewhat complex to implement, will ensure compliance with the target established in the Renewable Energies Plan that 5.83% of the petrol and diesel consumed by the transport sector in energy terms be replaced with biofuels by 2010. Furthermore, the certification system devised to verify compliance with this obligation could form the basis for the sustainable certification of biofuels established in the Renewable Energy Directive.

Exceeding 20% renewables

Directive 2009/28/EC came into force in June 2009 to promote the use of energy from renewable sources. This Directive establishes binding national targets, which for Spain, are in line with those set for the entire European Union – 20% of gross final energy demand to be met using renewable energies by 2020 and 10% in the transport sector – and demands that renewables be integrated into other sectors such as construction and urban development. This Directive also expressly refers to the positive externalities of these sources (clean and homegrown energies) and guarantees the use – and control – of support systems by Member States to help meet these targets.

The Directive forms part of the package of measures proposed by the European Commission in January 2008 – subsequently ratified by the European Council and Parliament – that included as objectives for 2020 increasing the contribution of renewables to 20% of gross final energy demand and cutting greenhouse gas emissions by 20% compared to 1990 levels. These targets also exist in the context of a 20% improvement in energy efficiency by 2020. This is the socalled 20-20-20 package, which combines various measures aimed at reducing the European Union’s energy dependence on the exterior and tackling climate change. Experts therefore consider that the Directive is extraordinarily valuable in ensuring the renewables sector continues to grow and gain market share.

This new scenario in Europe gives rise to an energy policy which Spain has embodied in 2010 in the 2011-2020 Renewable Energies Plan and the Renewable Energies and Energy Efficiency Law, which, along with the Sustainable Economy Law, form th

Promoting heat applications

The Renewable Energies and Energy Efficiency Law should improve the framework within which renewables are developed in Spain in terms of transversality, by increasing the visibility of the framework and ensuring it is technically and economically efficient. The new Plan will be the Government’s tool for ensuring compliance with the targets established for Spain in the Renewable Energies Directive. As well as reducing the barriers that still exists for the most developed technologies such as wind and photovoltaic, and boosting their efficiency, the new Plan should encourage the development of emerging technologies, and, in particular, result in a suitable mechanism for promoting the use of renewable energies to generate heat in Spain.

To date, Spain is the leading country in Europe and second in the world in terms of installed solar thermal electric capacity; is second in Europe and fourth in the world in terms of installed wind power; is second in the photovoltaic sector in both Europe and the world; and has the third largest small hydro capacity in Europe. At the end of 2009, total renewable electricity capacity installed in Spain reached 40,000 MW, 19,000 MW of which is wind power, 16,000 MW hydroelectric (including pure pumped- storage), 3,000 MW photovoltaic solar, and 232 MW solar thermal electric.

This latter technology is currently in full expansion. In terms of heat energy, total demand during 2009 amounted to approximately 3,700 ktep, while biofuels demand exceeded 1,000 ktep.

In 2009, another dry year, renewable energies also contributed 25% of the gross electricity generated, which rises to around 28% after normalising hydroelectric production based on historic mean values. More electricity is currently generated using renewables in Spain than using nuclear power. In order to reach the top positions in the renewables sector, Spain has invested heavily in R&D&I; some six times more than Spanish companies on average, especially in wind, photovoltaic and solar thermal electric technologies.
This effort has made the sector one of the most competitive, internationalised, and renowned in our economy. According to the Trade Union Institute of Employment, Environment and Health (ISTAS), more than 1,000 companies directly employ 89,000 people and indirectly provide 99,000 jobs; while half a million more posts could be created if Spain reaches the 20% renewables target for 2020 established by the Renewable Energies Directive. Achieving this target will also reduce energy dependence and cut CO2 emissions in order to fulfil the Kyoto Protocol. These provide clear cut examples of how renewables play such an important role in defining the new economic model that Spain aims to develop.

MANAGING THE ELECTRICITY SYSTEM WITH A LARGE RENEWABLES SHARE

One of the most outstanding aspects from a technical perspective is the transformation that the electricity generation system has undergone as a result of the installation of such a large amount of renewable capacity, particularly wind power with 19,000 MW at the start of 2010. In 2004, it was deemed to be most risky integrating more than 14% of wind power and warnings were given that exceeding this share would significantly increase the possibilities of a major power cut. Nevertheless, last November, wind power was used to generate more than 50% of the electricity output over a five-hour period, with peaks of 53% and a monthly average of 22.7%.
This a highly significant figure, because no other country the same size as Spain and with similar electricity demand and as weak cross-border grid connections has successfully achieved a 50% renewable share over such a long period of time. To make this possible, REE [the Spanish grid operator], which has worked hand in hand with sector experts for many years, opened the Renewable Energies Control Centre (CECRE) in 2007, which enables the maximum amount of renewable energy to be securely integrated into the electricity system.