Fast-track Approvals And Floating PV in Spain And Portugal

Policymakers in Spain and Portugal are simplifying the environmental approval process for PV and wind projects as they see the need to build more zero-margin-cost generating capacity. In the first quarter of 2022, the average wholesale electricity price in the Iberian Peninsula reached a record high of €229/MWh. Portugal awarded 183MW of floating PV capacity in an auction held on April 6, 2022. Portugal's bidding was very special, with participants bidding for grid connection capacity (measured in AC MW on the AC side) rather than installed direct current (DC) capacity. By ensuring the use of grid connection points, successful developers can build additional renewable energy capacity and maximize the use of grid connections.

The Spanish Ministry for Ecological Transitions and Population Challenges (Miteco) approved Royal Decree No. 6/2022 on March 29, 2022, allowing eligible PV projects with an installed capacity of less than 150MW and wind farms of less than 75MW to skip the lengthy local environment The specific conditions for the impact assessment process are: the project is located in a low or medium environmental sensitive area, the length of the overhead grid-connected line does not exceed 15 kilometers, and the voltage does not exceed 220kV. Local authorities will continue to monitor incoming project applications and may raise objections within two months.

Data released by Miteco shows that PV developers will benefit the most from simplified procedures compared to wind developers. About half (53%) of Spain's surface area has a low-to-medium environmental sensitivity rating that could be used to build photovoltaic capacity, while only 36% of the surface area available for wind power is available. This means that wind power projects planned for construction in two-thirds of Spain's territory cannot benefit from the new measures.

Spain's accelerated temporary process will last until December 31, 2024, and will only apply to projects accepted by the central government - usually projects with installed capacity of more than 50MW. However, Spanish autonomous governments may follow suit. Decree RDL 6/2022 foresees the inclusion of floating PV capacity in the hydro public domain, allowing projects to enjoy a concession period of up to 25 years. The new decree also considers the installation of photovoltaic systems on canals or other water surfaces owned by government units or other public entities.

Spain aims to increase the share of renewable energy in electricity consumption to 74% by 2030, which means that the country needs to add 21GW of renewable energy capacity between 2022 and 2030. Bloomberg New Energy Finance's Medium Scenario shows that the Spanish market will see an average annual growth rate of just over 6GW of renewable energy, with a cumulative installed capacity of 73GW by 2030, exceeding the government's 2030 target of 34GW.

Portugal will follow Spain's lead and no longer require environmental impact studies for new PV projects with an installed capacity of up to 50MW, said João Galamba, Portugal's secretary of state for energy. According to Galamba, the government will, as far as possible, allow the construction of projects with an installed capacity of up to 20MW in environmentally sensitive areas without following an environmental impact assessment (EIA) procedure.

On April 6, 2022, Portugal awarded 183MW of floating photovoltaic capacity through a bidding process. Among them, 103MW adopts the 15-year CFD model, while the remaining 80MW adopts the "system contribution" model, that is, the asset owner needs to pay to use the grid. After the first 15-year regulatory period, projects will rely on a 15-year commercial transaction period to improve profitability, provided electricity prices do not drop. The final results of the auction are expected to be announced on April 19, 2022, but the Portuguese government has already announced two winning bids based on 15-year CFDs.

French independent power producer (IPP) Voltalia has secured 33MW of capacity (based on regulated electricity prices of €41.03/MWh). EDPR, the renewable energy subsidiary of major Portuguese utility EDP, has secured the 70MW capacity of the Alqueva dam at an astonishing price of -4.13 euros/MWh. EDPR explained that these fees will be paid based on the 70MW grid connection point with revenue from other hybrid projects to be built.

Portugal's bidding was very special, with participants bidding for grid connection capacity (measured in AC MW on the AC side) rather than installed direct current (DC) capacity. By ensuring the use of grid connection points, successful developers can build additional renewable energy capacity and maximize the use of grid connections.

EDPR revealed that the company will eventually build 154MW of installed renewable energy capacity, exporting electricity at different times through 70MW of grid connection points. These projects include a 70MW floating PV system, an additional 14MW PV capacity (whether it is also a floating system is unknown) and 70MW wind capacity. Endesa Portugal, the Portuguese subsidiary of Spanish energy company Endesa, has secured 42MW of connection capacity, with projects planned to be connected to the grid including 42MW of floating photovoltaics, plus 48MW of wind turbines and 16MW of battery storage capacity.

Since wind power generation and photovoltaic power generation are complementary, integrating these two power generation technologies into the existing power grid at the same time will not lead to serious abandonment of light and wind. Instead, the power output will be more stable, and the pressure on the weak power grid will be less. Allow asset owners to negotiate more favorable power purchase agreements (PPAs).