Solar

Mixed Review for Spain’s Solar Energy Market

Feed-in tariffs guaranteed in Spain for solar photovoltaic power and the government’s ambitious plans to expand the solar market have led to a solar boom in the country. Solar companies from abroad pour into the Iberian Peninsula as investors and discover it to be a ripe sales market. But the further growth of the solar market could be complicated by several problems.

This is one conclusion from the new study by Europressedienst, “The Spanish Photovoltaic Market 2005/06,” for which extensive primary data among market participants were collected for the first time. Experts of the solar branch expressed reserved views regarding the development of the market. Reasons given for this estimation were the worldwide strongly rising demand for solar modules as well as the bottleneck of silicon. “Administrative barriers existing in Spain can distinctly slow down future market growth, too”, said Michael Forst, chief editor of Europressedienst. 166 Spanish installation companies out of the solar sector were interviewed by Europressedienst between June and July 2005 about the development of the Spanish photovoltaic market. These results were assessed and completed along with in-depth interviews conducted with 35 solar manufacturers and wholesalers, who have already amassed experience in the Spanish market. In view of the conservative statements of the market participants concerning the further growth of the Spanish solar power sector, Europressedienst forecasts a total installed capacity of 676 MWp in 2010. In contrast, the Spanish photovoltaic association “ASIF” assumes a growth to up to 1,100 MWp in 2010. This prognosis exceeds by far the objectives aimed at by the Spanish government. According to the “Plan de Energias Renovables 2005-2010,” solar electricity capacities are to increase within the next five years from 38 MWp in 2004 to 400 MWp in 2010. The reserved prognosis by Europressedienst is based on statements of the market participants and experts. Amongst others, administrative barriers are mentioned as a factor obstructing the further expansion of the market. More than half of the surveyed installation companies indicate that the excessive Spanish bureaucracy very often constitutes a problem for both the application for promotion funds and the permit of the solar systems. Furthermore, the interviewed manufacturers suggest the strong demand for solar modules as well as the scarcity of silicon as obstacles to growth. Long delivery periods, however, is only considered to be a frequent problem endangering the sale of solar systems by about 20 percent of the surveyed installers. At the same time, the expansion of the market could be hindered by the Spanish government’s promotion policy. For this year, it still provides investment grants for the construction of solar systems within the framework of the “ICO-IDAE-Line.” But already next year, these direct subventions, at least for on-grid systems, cease to exist. According to experts, the feed-in tariffs, which are still guaranteed in an unchanged way, offer sufficient incentives for investments. With 25 years, the allowance period set in the “Real Decreto” is even higher than in the German Renewable-Energy-Act. Despite the continuing favorable supporting conditions, the interviewed Spanish installation companies wish for an increase of the tariff for systems, which are bigger than 100 kW. So far, systems of a size of only up to 10 kW are in fact installed at 60 percent according to the market participants’ statements. But in the long term, the enterprises expect a shift of the sales market toward medium-sized systems with a capacity of up to 100 kW. In regard to the Spanish market participants’ statements, companies from abroad that would like to gain ground in the Spanish market could be confronted with unfamiliar and partly problematic market conditions. This includes a comparatively different supply and sales market atmosphere. At the same time, Spain is qualified as the model market for the expansion of the solar power sector in the entire Mediterranean area.