A very ambitious NECP that requires a great effort from everyone

The plan has been well received by the main industry associations, although there are voices like that of José Bogas, president of Endesa, who believes that in some areas, such as industrial consumption, it may not be enough, and that Spain’s distribution network, although quite good compared to Europe, is far from being able to meet future goals. He also warned of the issues related to absorbing renewable energy if the network is not reinforced.

The new NECP is based on two major technologies, solar and wind power, although it also emphasises combined cycle plants. In general, it responds positively to the requests made by industry associations during the prior negotiations, albeit with some nuances.

The share of renewables is raised to 81%, and installed capacity in the electricity sector will reach 214 GW (160 GW from renewables and 22.5 GW from storage).

Solar

Solar photovoltaics aim to have over 76 GW connected by 2030, nearly doubling the 39 GW from the 2021 plan. Currently, there are 28,500 MW installed, which means a development of 46 GW over six years, or around 7 GW per year, something never achieved before. Within this growth, self-consumption will experience a decisive boost, reaching 19 GW.

We agree with APPA that for this to happen, demand flexibility is crucial, and additionally, "it is necessary to promote photovoltaic development with more storage and more demand during the central hours of the day.” It’s also important, as UNEF rightly states, to promote “social acceptance of the installations.”

We must not forget that we are facing a unique opportunity. “For the first time in history, Spain is facing an industrial revolution with a great competitive advantage, namely the price of electricity, as thanks to photovoltaics, we can produce it at less than half the price of the European average.”

Wind

The NECP foresees wind power reaching 62,000 MW, including 3 GW of floating offshore wind, by 2030, and it currently has 31,000 MW connected. Is it possible to develop these 31 GW of additional capacity by 2030? A challenging feat. This would require a rate of project development never before achieved, especially considering that in the past two years, growth has been 1 GW annually. This means doubling the current capacity, distributed across 22,200 wind turbines in 1,345 wind farms across Spain.

A significant deployment will be necessary to increase installed capacity by 31 GW. This deployment will need to be achieved by repowering older wind farms but also by installing new capacity, and depending on the extent of the repowering, the increase will need to be between 2 to 2.5 GW, up to 4 GW annually, according to estimates by the sector’s employers’ association AEE. To achieve this acceleration, it is crucial that authorisations and permits, both for new capacity and replacing obsolete turbines, be significantly expedited. Currently, in most cases, the approval timelines for these authorisations are up to three times the legal limit, and in some stages, they can take up to ten times longer.

Storage

It is expected that by 2030, storage capacity will reach 22.5 GW. 12.5 GW will be intraday management, i.e., batteries or solar thermal, and the remaining 10 GW will be achieved through seasonal storage (pumped storage).

This is a challenging target, given that to date, only 27 MW of batteries and 5,400 MW of pumped storage are connected, and there is currently no regulation for battery development. Moreover, implementing reversible hydroelectric pumping takes over five years.

However, AELEC notes that storage access requests have reached 10 GW of capacity. "They are asking us for a flexible capacity that we cannot provide, and this is creating a bottleneck that needs to be addressed quickly,” says Marta Castro, AELEC’s director of regulation.

This reinforces the widespread opinion on the need for anticipatory investments in the network, with a proactive strategy to strengthen the electrical infrastructure based on projected future needs beyond the current confirmed demands. It is necessary to stay ahead.

Required Investment

To meet this ambitious plan, an estimated investment of around €308 billion by 2030 is required, which is €14 billion more than forecast in the previous draft. According to Mario Ruiz-Tagle, CEO of Iberdrola, this will require “agility, anticipation, and decarbonisation,” with a focus on digitalisation: “the state needs to be digitised in all aspects related to permitting.”

However, mobilising this investment will require regulation, stability, a long-term vision, and maintaining conditions that encourage capital investment. In short, coherence. It is inconsistent to create new taxes or make temporary ones permanent to maintain fiscal sustainability while setting targets that require high investment. When energy companies face higher operational costs, it not only affects their profits but also their ability to invest in green infrastructure and technologies.

To put things in perspective, “the current value of a perpetuity of taxes that were supposed to be temporary, based on a reasonable opportunity cost, represents about €13 billion in lost value for the sector,” says economist and financial analyst Alberto Roldán.