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Sunny days ahead for Spanish renewables

Wednesday, 03 March 2021

Reuters has noted an uptick in stock market activity for Spanish clean energy companies, taking advantage of a market boom to build more solar and wind assets. We also take a look at how this could impact the Spanish GO market.

An abundance of solar resources waiting to be tapped into, an established wind sector as well as the push for decarbonisation have all lead to a rush towards renewable investments.

Petrochem major Repsol and sustainability firm Acciona have announced plans to create energy branches which could be valued in billions of Euros. Acciona, who also launched a hydrogen GO platform in February 2021, have been slated for listing while Repsol have suggested a timeframe of 18 months for an IPO or stake sale.

Iberdrola, the largest power firm in the nation is looking to invest 150 billion euro over the next decade which will contribute towards tripling its own renewable capacity worldwide.

Spain has planned for aggressive solar and wind expansions which should amount to over 50 GW of additional capacity within the decade.

The fast growth in solar is notable given the cuts in 2013 to the subsidy program, although the continued falling costs of solar infrastructure has more than offset this. The excitement within the renewables sectors was reflected in the underlying financial markets, with industry representatives noting a rush to buy into projects as well as strong growth in sustainable stocks.

Solar and Wind capacity trends in Spain and GOs

As previously mentioned, Spain experienced a slowdown in renewables uptake; this can be traced back to 2008 when the financial crisis hit, where the rate of expansion of renewables slowed. Growth in 2014 was particularly sluggish coinciding with the 2013 subsidy cuts and it was only in 2019 where the local industry experienced a 'second wind'.

Graph of Solar PV and Wind capacity - net additions

While national mandates such as the Royal Decree-law 15/2018 have contributed to the renewed push for sustainable energy, there is significant interest in unsupported generation buoyed by the aforementioned factors of falling renewables costs and currently under-exploited wind and solar resources in the Iberian nation.

In Spain, both unsupported and supported renewable generation are able to receive GOs. In 2020, Spain was the second largest issuer of GOs, after Norway. With a planned expansion in Solar and Wind, as well as few restrictions on GO issuances we would expect this gap to close in the next five years.

Under the Spanish domain protocol, only GOs from unsupported generation may be exported to other countries. Spain was seventh among AIB members in GO transaction exports in 2020 - given that a significant portion of the new production will come from unsupported generation in the future, GOs eligible for export will rise. However, actual exports will also depend upon competition from domestic demand.