The outbreak of the war in Ukraine and the rise in gas prices in international markets made 2022 the most expensive year in history for Spanish electricity consumers. Among the multiple recipes that the Government launched to alleviate this rise was that of promoting the generation of electricity from renewable energies.
That lowered, in part, the bill for final consumers, but it could have done much more, according to a study published this Wednesday by the Aurora Energy Research institute. “Spain's electricity transmission system has not kept pace with the country's rapid buildout of renewables in recent years, creating areas where local transmission assets do not have the capacity to deliver available power to consumers, thereby which causes the generation to be reduced”, says the study.
In the Spanish case, these technical restrictions multiplied by ten the energy from renewable sources compared to the previous year, which implies a cost for Spanish energy consumers of 1,300 million euros. Last February, the Association of Renewable Energy Producers (APPA) already warned of losses due to the inability to use the energy produced by renewable self-consumption, which in this case amounted to 160 million euros.
In neither of the two cases, the situation is punctual. “ Spain's renewable energy portfolio far exceeds capacity additions projected by transmission system operator REE, indicating that grid constraints and the resulting costs for developers, investors and consumers will increase until they are taken measures to address them”, point out from Aurora that they point to the promotion of storage as a strategic option to solve the problem.
The Minister of Ecological Transition and Demographic Challenge, Teresa Ribera, already announced on March 22 that the new Development Plan of Red Eléctrica, the network management company in Spain, contemplates investing 7,000 million euros in improving the current 8,000 kilometers of electrical networks, install 2,700 kilometers of new lines and 700 of submarine connections. Of these, 1,900 million will be allocated to the integration of renewable energies and to mitigate the technical restrictions that prevent and will prevent the maximum use of renewable production in the near future. Specifically, she Ribera referred to the impulse of the batteries and the synchronous compensators.
The Aurora report qualifies Spain as "a renewable energy superpower" due to the "favorable climatic conditions and the ambitious objectives of the Government" has quantified the country's evolution in this sector. In which energies accounted for 51% of total power generation in 2022, compared to 46% in Germany and 38% in the UK, and installed capacity increased by 9% year-over-year.
Aurora Energy Research projects that renewables will generate 80% of total energy production by 2030, exceeding the Government's target of 74%.
“While investments in the grid infrastructure are needed to accommodate the entry of renewables into the system, the market design used to resolve congestion issues must also be looked at. The technical constraints market is a pay per location offer market. This creates a barrier to entry that limits competition, allowing some power plants to bid up to €80,000/MWh in a few hours, despite the high costs for consumers,” says Christina Rentell, senior research associate, Iberia, Aurora Energy Research. .
