Spain — a country in southern Europe, is blessed with one of the best, if not the best, conditions for utilizing solar energy in the continent. Consequently, one would expect Spain to be among the European market leaders in Solar energy development. This, however, is not the case as energy resource availability itself is not always the determining factor.

Energy resource availability itself is not always the determining factor.

While in 2010 it was the second largest solar market in Europe, giving way only to Germany, in 2013 it had already fallen down to the 5th position. The main reasons for the decline were the 2008 economic crisis as well as a harsh regulatory environment for solar energy. In 2012 a moratorium for incentives for new renewable energy installations was implemented. Additionally to that Spain has been known for its notorious “solar tax”. The problem with the latter is that it taxes self-consumption PV installations even for the electricity they produce for their own use and don’t feed into the grid. As a result of these obstacles, until the end of 2016 the development of Spain’s solar market stagnated, with just 49MW and 55 MW of newly installed capacity in 2015 and 2016 respectively. Nevertheless, one could say that with such harsh conditions and lack of investor trust, the market did rather good.

Despite the track record, the future for Spain’s solar market looks much brighter. While this is largely influenced by the global decarbonisation of the energy industry, special credit should be given to the Spanish government and the transmission grid operator for their ambitious plans to contribute to a greener future.The newly appointed Minister of Ecology, Teresa Ribera has openly expressed her position towards improving the legislative climate for the developments in Renewable Energy sector, including getting rid of the “solar tax”. Elimination of this tax would fuel significant growth, especially in C&I (commercial and industrial) as well as residential segments.

The future for Spain’s solar market looks much brighter.

Already in 2017 newly installed solar power has reached 135 MW, compared to last year that’s a whooping 145% increase. While most of that capacity came from self-consumption and off-grid projects, large solar parks are also catching up. In an auction held in July of 2017, the Spanish government allocated a total of 3.9 GW of solar power, all of which is set to go online by the end of 2019.

With all of these new developments taking place, the forecasts for the future of Spain’s solar market look optimistic to say the least. In its latest report the Spanish Ministry of Industry, Tourism and Digital Agenda predicts that solar will become Spain’s largest electricity source by the year 2030. Spain is also one of the countries that recently expressed their support for the EU 2030 RES (Renewable Energy Share) target of 35%.

According to the most optimistic figures, the cumulative installed PV power will increase from current 7.3 GW (PV~5 GW) to 77 GW by the end of the next decade. The realization of this scenario means that a RES of 70% in Spain’s electricity mix would be reached. Such positive forecasts for solar and in general for renewables are made taking into account the country’s current energy balance. In 2016 around 25 % of the country’s electricity was produced by coal, natural gas or oil fired power plants. With solar energy prices already competing with those of fossil fuels and pressure to bump up the use of renewables increasing, it becomes less and less likely for newly installed power capacities to be based on conventional energy sources.

Another large portion (22%) of electricity production belongs to nuclear. While its costs are competitive, most of the nuclear power plants in Spain are 30 to 40 years old, with the current power production licenses ending by 2024 at the latest. Therefore the demand for alternatives in the near future will inevitably grow and there is little doubt that with the lowest LCOE (Levelized cost of electricity) most of that amount will be replaced by solar and wind. Since 2012, Spain has moved from exporting of 11.2 TWh (Morocco, Andora) to importing of 7.3 TWh (France, Portugal). Shifting the import-export balance back to the positive side certainly has economical upside, thus motivating the development of renewables even more.

Another clear sign of a bright future for solar in Spain are the emerging subsidy-free solar projects. Already 800 MW of solar parks have secured private PPAs (power purchase agreements) and counting. One of which is the 170 MWp Don Rodrigo solar park developed by the renewable energy giant BayWa r.e. with a PPA already signed for 15 years. Having in mind that this is one of the very few subsidy-free parks in Europe of this scale, a message about the market’s attractiveness is clearly portrayed. This, among other changes in Spain’s solar market, has been recognised in this years Genera — International Energy and Environment Trade Fair, held in Madrid.

“Already this year we may see the first unsubsidized solar parks being connected to the grid, as a result of continuing activity in the private PPA segment,”

UNEF (Unión Española Fotovoltaica) president Donoso said at this years Genera fair.

However, it’s important to recognise that a growing interest in subsidy-free solar projects is caused not only by the increasing competitiveness of solar energy, but also by the lack of certainty about the conditions of the Government subsidies. A history of retroactive actions on granted incentives is the reason why more and more investors choose the private investment path. Consequently, in an energy market where a solar or wind energy producer becomes an economically viable subsidy-free investment (grid parity), the role of the government is bound to change. With such a future just around the corner, the government may soon switch from providing subsidies to reducing bureaucracy and creating legislation that supports corporate power purchase agreements and green energy investments. In combination, a changing legislative climate, advancement in solar energy technologies and growing awareness of the importance of sustainability are waking up the previously stagnated Spanish solar market. Whatever the order of these changes may be, Spain is certainly on the right track to become the leading solar energy market in Europe.