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The expansion of renewables on the Balearic Islands is lagging behind the Spanish mainland. Therefore, their expansion is to be promoted with public funding of at least EUR 60 million in 2019. The implementing provisions will be published in the nearest future.
On the Spanish mainland, 34% of electrical energy is already generated from renewable sources, while the current ratio for the Balearic Islands is only 2%. Since most of the electricity generated on the Balearic Islands is generated locally using fossil fuels, the 2017 average LCOE of EUR 84.6/MWh is nearly double the average mainland cost of EUR 50/MWh (source: UNEF).
Several times in the past, the Madrid Ministry of Energy has announced auctions for the expansion of renewable energy on the Spanish islands and has already published draft laws, but in 2017 only auctions for the whole of Spain were issued, without taking into account the special features of the islands.
The subsidies now announced in Order TEC/1314/2018 of 7 December are to be organised by the "Instituto par la Diversificación y Ahorro de Energía" (IDAE), whose task will then be to organise the competitive auctions for renewable energy projects on the Spanish islands.
The electricity generated under the projects should be fed into the public grid and eligible for funding under the European Regional Development Fund (ERDF) to enable co-financing within the framework of the ERDF Fund and IDAE funds. The EUR 60 million will be transferred to IDAE from the surplus funds of the Spanish interconnection grid over the next few days, so it can be expected that the auctions will be implemented swiftly.
According to UNEF’s estimates, the subsidies will expand the renewable capacities by 250 MW, which would mean a reduction of 325,000 tons of CO2 per year. In addition, the lower LCOE would save the Spanish interconnection grid money, which would compensate for the subsidies within a short period of time.
Christoph Himmelskamp
Partner
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