Spain has connected more solar to its grid in the first nine months of 2019 than the last 10 years put together.

Data released by grid operator Red Eléctrica de España (REE) shows that around 1,541 megawatts of solar PV capacity has been plugged into the grid so far this year.

Spain enjoyed a subsidy-driven solar boom late last decade before suffering through a dramatic slowdown. Retroactive policy changes and laws to prevent self-consumption decimated the sector in 2013.

A combination of government-backed auctions and subsidy-free development has sparked a new phase of growth. The auctions have thus far awarded contracts for 3.9 gigawatts of new solar capacity. Some investors have spoken privately of an unwillingness to participate, however, given the nature of the policy changes in 2013.

Many are instead pursuing alternative routes to market, including power-purchase agreements.

Wood Mackenzie expects more than 2,500 megawatts to be installed in Spain in each of the next five years.

“Most of what is being built in Spain during 2019 comes from the pipeline of projects that were awarded during the July 2017 renewable auctions — the deadline for interconnection is the end of 2019,” said Wood Mackenzie solar analyst Tom Heggarty.

“On top of this, there is a significant pipeline of projects being developed outside of a government support mechanism, either to sell power into the wholesale market or to offtakers under bilateral PPAs,” Heggarty said.

Massive interconnection queues

BayWa r.e. developed the first major unsubsidized solar project in Europe with its 175-megawatt Don Rodrigo array, setting a framework which many projects will now attempt to replicate. After agreeing a 15-year PPA with the Norwegian firm Statkraft, the project was sold to an institutional investor. BayWa r.e. has agreed to a 12-year deal with Statkraft for a 50-megawatt second phase of the project. Completion is expected before the end of the year.

Developers have built a huge pipeline of projects seeking grid connection in Spain, and the sector is aware that there's a limit how many can ultimately go forward. REE claims that proposals for 81.7 gigawatts of wind and solar projects have been granted permission for connection, with another 57 gigawatts awaiting approval.

Factoring in self-consumption and distributed solar installs as well, Wood Mackenzie expects almost 20 gigawatts of Spanish solar capacity to be installed during 2019-2024. Three-quarters of this will be utility-scale.

“The key challenge associated with bringing these projects to market is securing grid connection agreements,” Heggarty said. “The sector has seen a lot of a speculation, with developers acquiring grid connections without being able, or without intending, to develop projects alongside those."

Moving to curb speculation, Spain's regulator late last year increased the cost of a grid-connection guarantee from €10,000 ($11,005) to €40,000 per megawatt. And in recent weeks, REE canceled 26 gigawatts of grid-connection applications, of which 20 gigawatts were for solar projects, Heggarty said.