Market Trends of Spain Solar Energy Industry
Solar Photovoltaic (PV) Type to Dominate the Market
- Solar photovoltaic (PV) technology is expected to account for renewables’ most considerable annual capacity additions, well above wind and hydro as well. The solar PV market cut costs dramatically in the past six years as it was flooded with equipment. The cost of solar panels also dropped exponentially, leading to increased solar PV system installations.
- In June 2023, Spain's Ministry for the Ecological Transition and Demographic Challenge (MITECO) published a revised draft of the National Integrated Energy and Climate Plan (PNIEC) with a target of reducing Greenhouse Gas (GHG) emissions by 32% compared to 1990 surpassing the previous goal of 23%. To meet these targets, the new energy strategy outlines a plan to have 76 GW of solar photovoltaic installed capacity by 2030, including 19 GW for self-consumption.
- Various Investments to increase the solar PV capacity propels the country’s solar market growth. The European Investment Bank (EIB) is bolstering solar initiatives in Spain with a significant loan agreement totaling EUR 80 million (USD 86.54 million). The EIB signed the loan with global energy company Cepsa to facilitate the construction of two solar PV plants in Andalusia, adding 227MW of electricity to the grid. The investment aligns with the European Union’s cohesion objectives, addressing regional inequalities by deploying more than 227MW of capacity in regions with lower per capita income.
- On February 10, 2024, the Norwegian power company Statkraft received consent from the Spanish Ministry for the Ecological Transition (MITECO) to build a 228-megawatt capacity solar farm in Murcia, Spain. The company plans to invest around USD 161.8 million in the project named Fausita Solar. This will be the company’s first renewable energy project in Murcia and one of its largest solar farms in Spain. The commissioning of the plant is expected to take place in 2026.
- Similarly, In January 2024, Ethical Power Spain was awarded the EPC contract for two photovoltaic projects in Malaga, Spain., owned by Korkia. The two projects have a total capacity of 9MW and are located next to each other in the province.
- With large solar power projects lined up to achieve the aim of 31 GW by the end of 2030, the growth of the solar photovoltaic market in Spain is expected to witness significant growth during the forecast period.
- According to the International Renewable Energy Agency (IRENA), the Solar Energy Installed Capacity increased by 28.1 % in 2022 compared to 2021; the increase is due to new projects started in the past year. This number is likely to increase in the upcoming years during the forecast period.
- Thus, with such ongoing developments and capacity additions supported by favorable government policies, the solar PV segment is expected to dominate the market during the forecast period.
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Supportive Government Policies and Targets Driving the Market Demand
- Spain is a prominent consumer of renewable electricity worldwide and a significant contributor to the growth of renewable energy capacity worldwide. The country's market for renewable energy capacity additions is one of the largest globally. Spain is ranked third within the European Union, just behind Germany and France, in terms of its renewable energy sector.
- The Spanish government is promoting renewable energy for several reasons. Firstly, it is committed to reducing the country's dependence on fossil fuels and increasing its share of renewable energy in the energy mix. In June 2023, Spain raised its targeted 2030 reduction of greenhouse gas emissions to 32%, up from a previous goal of 23%, due largely to a rise in expectations on how much solar PV can be built out by the decade’s end. Spain's revised plans for renewables point to a massive 56GW deployment of solar from 2023 to the end of the decade. Secondly, promoting renewable energy aligns with Spain's commitment to the European Union's Renewable Energy Directive, which sets a binding target for the EU to achieve a 42.5% share of renewable energy in final energy consumption by 2030.
- In February 2024, According to Spain's minister of ecological transition, the government submitted a new incentive scheme to public consultation. It is designed to support the development of a clean energy technology supply chain in the country. The authorities have launched the project for the first call for subsidies for energy transition equipment production, with a budget of USD 1.24 billion. Backed by funds from the Plan for Recovery, Transformation, and Resilience (PRTR), the scheme is expected to support the production of equipment and essential components of photovoltaic panels, batteries, wind turbines, heat pumps, and electrolyzers.
- As of 2022, the Spanish PV sector had no public aid or regulated remuneration systems. All new power was built leveraging the PPAs or with exposure to the market (merchant). Spain was the leading European market in PPAs in 2020. However, according to SolarPower Europe, Spain is expected to have a total installed solar PV capacity of 29.0 GW by 2024 in the medium scenario, thus making it the second-largest solar market in Europe. In this process, corporate sourcing, Power Purchase Agreements (PPAs), RES auctions, grid access regulatory framework, and self-consumption will play a vital role in the development.
- The Spanish government has taken bold steps, like the formation of the Strategic Energy Technology Plan and the Low Emission Strategy 2050, which have made the nation a global leader in the renewable market and reduced its carbon footprint at an astonishing rate.
- According to the International Renewable Energy Agency (IRENA), in 2022, the Renewable Energy Capacity increased by 9.5 % compared to 2021; the increase is due to new projects started and Supportive Government Policies implemented in the region during the past year. This number is likely to increase in the upcoming years during the forecast period.
- Therefore, with the increasing adoption of renewable energy and the development of financial incentives for solar plants, the market under study is expected to witness positive growth during the forecast period.
