The first 10-year-PPA concluded in Spain

The year 2018 heralds the beginning of a new era in European photovoltaics. Spanish PV installations are competitive, regardless of any type of state subsidy. Increasing market prices support this trend.

Foresight Group, a UK-based asset management company being the operator of the future PV installation Torre de Cotillas I in Murcia and EVU Enérgya-VM of the real estate group Villar Mir, concluded Spain's (and probably Europe's) first 10-year PPA for an unsubsidised solar park. No information as to the economic terms of the agreement were released to the press. The installation will be connected to the grid mid 2019 and have an installed capacity of 3.952 MWp. It is a relatively small installation compared to the installations currently being planned (and those planned in the past) but Torre de Cotillas I is intended to be only the first stage of a broader 18 MW development project. The installation will be developed and erected by Solarig Global Services, a Spanish and international EPC and project development company.

After hitting historical lows in the spring of 2016, the spot electricity prices quoted at the energy exchange OMIEL recovered and their annual average was 52.22 EUR/MWh, whereas the market prices in the “PV window” were again about EUR 3.5 higher. The trend was also reflected in the futures market, where the price amounted to 50.95EUR/MWh for the third quarter 2017 (source Nexus Energia). But also in other European countries the spot electricity prices increased noticeably in 2017 compared to the previous year.

Average prices at the European energy exchanges (in EUR/MWh)

It remains to be seen how the spot price will develop in Spain in the coming years. Factors that should be taken into consideration are: possible non-renewal of the operating licence for the nuclear power plants Vandellós II and Almaraz ( 2093MW in aggregate) in 2020 and Cofrentes and Ascó in 2021 (2059MW in aggregate), recovery of the Spanish economy, expansion of the European internal electricity market and extension of the electricity network connecting Spain to France.

But one thing is certain: in December 2017, the European Union already set a milestone for the expansion of the European electricity market and Europe’s energy transition. On 18 December 2017, the EU Energy Council approved Brussels’ legislative package “Clean energy for all Europeans”. With the measures adopted as part of the package the European Union intends to make the European electricity market more flexible and, thus, fit for renewable energies. On the one hand, it is intended to massively promote the cross-border electric grid expansion so as to facilitate the exchange of electricity within Europe. As a result, operators of Spanish power plants could stronger benefit from increasing prices quoted at the electricity exchanges in other European countries. Moreover, it is intended to focus more on as undistorted competition as possible throughout Europe instead of capacity markets and, thus, to give impetus to investments. As part of the process, the funding of climate-damaging power plants will be gradually reduced. The European Union intends that in 2020, at least 20% of the overall energy consumption will be covered by energy from renewable energy sources, and in 2030 the ratio will be at least 27%. As it seems, thus, the future of Europe will be entirely under the banner of “clean energy”.