The Current Situation and Perspectives on the Use of Wind Energy for Electricity Generation:Spain

Spain

Spain is currently far from its renewable energy target. In 1997, a strong support program in favor of the use of new renewable energy sources for the generation of electricity was introduced.

The use of new renewable energy sources for the generation of electricity in Spain benefits from the following support mechanisms:

• A FiT or a premium price is paid on top of the market price. The possibility of a cap and a floor mechanism for the premium is being considered. In the draft law published on November 29, 2006, reduced support for new wind and hydro- power plants and increased support for biomass, biogas, and solar thermal electricity were proposed;

• Low-interest loans that cover up to 80 % of the reference costs are available.

The Spanish Renewable Energy Plan for 2005–2010 (REP) approved in the Council of Ministers in August 2005 sets the goal of meeting 12 % of total energy consumption from renewables in 2010.

The target to be achieved in 2010, under the EU Directive, is 29.4 % of gross electricity consumption. The revised plan of 2005 sets capacity targets for 2010, which include wind (20,155 MW), solar PV (400 MW), solar thermal (4.9 million m2), solar thermal electric (500 MW), and biomass (1,695 MW).

Until recently, installed wind power in Spain was anecdotic, and its influence on the system was insignificant. Over the last few years, however, the installation of wind power generation connected to the Spanish electric power system has expanded fast. This growth has proven more rapid than average growth within the EC.

Wind power producers are entitled to transfer their production to the system through the electricity distribution or transmission company whenever the absorp- tion of the energy by the network is technically possible. Wind power producers may choose from two different options in order to incorporate their production into the system. They can opt to participate directly in the wholesale electricity market or to sell the energy to distributors.

The first option of participating directly in the Spanish Wholesale Electricity Market involves either presenting bids or establishing bilateral contracts. In both cases, wind power producers have the same treatment as the ordinary regime as far as ancillary services are concerned. If they opt to participate directly in the Spanish Wholesale Electricity Market presenting bids, their production has the fol- lowing treatment concerning congestion management:

• Their production cannot be withdrawn on the grounds of network congestion problems (except for real-time management), if they bid as price takers;

• Their production shall be incorporated for solving technical constraints, provided their bid price is less than 70 % of the reference tariff (except for real- time management);

• The producers shall be connected to a distribution company that in turn is connected to a point of the transmission network in which the system operator has identified a constraint problem.

The second option is to sell the energy to the distributors. Wind power producers are entitled to sell their production to the distribution companies, which are obliged to buy this energy. The distribution companies deduct this production from the buying bids that they have to present to the Spanish Wholesale Electricity Market in order to supply their captive customers. The above is also what cur- rently applies to production from all renewable and high-efficiency power plants, integrated in the so-called “special regime”, as opposed to the “ordinary regime”.

The year 2005 saw the consolidation of a reliable support system in Spain’s electricity market. More than 7,900 MW in wind mills was connected to the Spanish peninsula power system networks. This enormous amount requires advanced solutions in order to maintain the actual level of power quality, such as the development of dispatching centers, which transmit with accuracy the orders given by the transmission system operator to the wind farms. Integration of wind power is possible, but it requires the development of adequate procedures that harmonize and make compatible the technical requirements with the market rules.

One major step for renewable energy was the approval of the REP for 2005–2010 in the Council of Ministers in August 2005. The REP had set new targets for the installation of new wind energy capacity and for electricity production using this renewable source. The purpose is to achieve the 12 % target of primary energy consumption from renewable energy sources. The REP also aims to steadily combat increasing CO2 emissions, which are now 30 % higher than previously forecasted in order for Spain to fulfill its Kyoto commitments. Spain holds the second position in the EU for installed wind power capacity with 22,959 MW in 2013; this represents an increase of 0.8 % with respect to 2012. In that year, the number of wind farms operating in the country reached 985.22 The major increase in wind power-installed capacity was reached in 1998 (95.4 %). In 2012, the new wind power capacity reached 1,112 MW almost similar to the increase reported in 2011 (1,050 MW), according to IEA Wind source.

Spain’s NREAP aims to exceed the country’s binding 20 % target by almost 3 %. The Spanish NREAP 2011–2020 establishes for onshore wind energy an objective of reaching 27,847 MW in 2015 and 35,000 MW in 2020. The document emphasizes the role of the power sector in reaching the overall target and forecasts that 41 % of all elec- tricity consumption will be met by renewable in 2020, with wind power alone expected to meet half this amount. Surprisingly, however, the action plan has reduced wind power capacity ambitions to 35 GW onshore, with build-out rates below what the Spanish market has delivered in recent years. This is 4–5 GW less than in EWEA’s scenario. With no offshore installations operating, the objective set up by the Spanish NREAP 2011–2020 is to reach 22 MW in 2015 and 750 MW in 2020 The offshore target, on the other hand, is more ambitious than expected, with first capacity scheduled to come online in 2014. The wind energy target for 2020 is shown in Table 5.30.

The Current Situation and Perspectives on the Use of Wind Energy for Electricity Generation-0164

Generation of Electricity Using Wind Energy

According to Murray and others (2014), Red Eléctrica de España released a preliminary report on the country’s power system late last month, revealing that for “the first time ever, wind power contributed most to the annual electricity demand coverage.” For this reason, Spain become the first country in the world to draw a plurality of its power from wind energy for an entire year, according to new reports by the country’s energy regulator and wind energy advocacy group Spanish Wind Energy Association.23 According to this association, wind turbines met

21.1 % of electricity demand on the Spanish peninsular, narrowly beating the region’s fleet of nuclear reactors, which provided 21 % of power. In total, wind farms are estimated to have generated 53,926 GWh of electricity, up 12 % on 2012, while high levels of rainfall meant hydroelectric power output was 16 % higher than the historical average, climbing to 32,205 GWh. Throughout 2013, the all-time highs of wind power production were exceeded. On February 6, wind power recorded a new maximum of instantaneous power with 17,056 MW (2.5 % up on the previous record registered in April 2012). Similarly, in January, February, March, and November, wind power generation was the technology that made the largest contribution toward the total energy production of the system. An increase in wind power capacity of 173 MW coupled with an increase in solar PV capacity of 140 MW and solar thermal capacity of 300 MW meant that by the end of the year renewables represented 49.1 % of total installed power capacity on the Spanish peninsula. However, going into 2014, it is unclear how wind will survive steep government cutbacks as a result of the economic crisis affecting the country.

At the moment, Spain heavily subsidizes its renewable energy sector, which costs billions of dollars in a country still in the depths of a financial crisis. When the country tried to raise individual rates for renewables, people complained bit- terly and the government backed off, leaving the country with a nearly US$35 bil- lion renewable energy deficit.

The idea that renewables cannot survive without heavy subsidies might be cooling off the market in Spain and elsewhere, bringing the future of renewable growth into question. Global investment in renewable energy slipped 12 % last year, despite the fact that the EU and the United Nations have set ambitious energy goals for the next decade.

The evolution in the generation of electricity in Spain using wind energy as an energy source during the period 2008–2012 is shown in Fig. 5.45.

According to Fig. 5.45, the generation of electricity in Spain using wind power during the period 2008–2012 increased 47.3 %. It is expected that the generation of electricity in the country using this type of energy source will continue

The Current Situation and Perspectives on the Use of Wind Energy for Electricity Generation-0165

increasing during the coming years, but in a slow rate, due to the decision of the government to eliminate around 40 % of the resources that put into the wind sector.

Finally, it is important to highlight the following: A new law came early in 2012, Royal Decree-Law 1/2012, temporarily (the duration was not established) suspending pre-allocation incentives for new energy production projects using, among others, renewable energy. The justification, based on the economic crisis and on the financial difficulties in the electricity industry, was to halt a reward system that involved a substantial cost for the electricity system, causing the tariff deficit, in particular, limiting the impact of renewable premiums in the tariff deficit, reducing costs in this way.

This measure would not affect projects registered in the Pre-Allocation Registry at the time the law was passed. At that time, there were around 1,900 MW of wind projects registered. Slightly more than 1,100 MW was deployed during 2012, so about 800 MW could be installed. For about 450 MW promoters have declared that they cannot be built under the current rules due to problems beyond the control of the promoters (delays in the planning of the transport network and distribution lines, administrative difficulties, etc.). This means that, with a valid green morato- rium, only around 350 MW of wind power remains installable in Spain under the current rules in 2013 and in 2014. However, the Royal Decree-Law 2/2013 adopted by the government in 2013 assumes that all wind farms will compulsorily adopt the regulated rate and reduces the update settings of incentives. Given the loss of return implied by the new rules, the installation of these remaining wind farms is threatened. For this reason, it will be necessary to clarify the future regulatory framework in the wind sector without further delay, if Spain is to reach 38,000 MW in 2020, the goal of the NREAP sent by the Spanish government to the EC.

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