Rapid growth is taking the Spanish photovoltaic sector to unprecedented levels. Mike Stirzaker takes a look at the industry’s achievements and at the policies driving the success.Spain’s solar photovoltaic market has entered a period of exponential growth, with multimegawatt projects being announced almost weekly. Manufacturing capacity is ramping up, and southern Europe’s first polysilicon processing plant is fast developing in Andalucía. Factories for concentrated PV systems and thin film modules are also getting a foothold. With the recent extension of pay schemes for PV-generated power, sector sights are increasingly aimed at world market leadership.
In the 12 months of 2006, Spain put up more new photovoltaic capacity than in all previous years put together. Specifically, 73.7 MW of new capacity went into operation – triple the figure for 2005 – to reach a cumulative total of 133.6 MW, according to figures provided by the national PV industry association, Asociación de la Industrial Fotovotaica (ASIF). Figures from other entities vary, including that of state energy efficiency agency Instituto para la Diversificación y Ahorro de la Energía (IDAE), which tallies off 60 MW of new capacity installed last year. Variations aside, all figures demonstrate a market in boom.Growth too fast to pin down
For year-end 2007, the most conservative estimate for new installed capacity is 120 MW. International solar consultant Solarbuzz estimates the figure at 200-280 MW, citing the more than 200 MW of projects currently at an advanced stage of development. The same firm calculates the US PV market, currently the world third largest, will finish 2007 with 204-235 MW of new capacity. That means Spain is now in the running to compete for that third place. ‘What’s for certain is that strong growth will continue into the foreseeable future,’ says Ernesto Macias, who is Vice-Chairman of the European Photovoltaic Industry Association (EPIA) and Public Affairs Director of Spain’s top module producer, Isofotón.
5.4 MW Aznalcóllar PV array, Seville province, by partners Gamesa Solar and Idesa GAMESA
ASIF Chairman Javier Anta also exudes confidence, after years bemoaning the torpid pace of Spain’s PV market. ‘We are Europe’s second photovoltaic market and industry, and we compete in terms of price and quality on the world stage,’ says Anta. ‘Depending on future German growth, we could be looking at first place not too far into the future.’ That is quite a statement, given that Germany is currently the world’s top PV market as well as Europe’s ultradominant market, with some 1537 MW installed over 2006 alone, according to figures from EurObservER, the EU’s monitoring service. Anta thinks Spain could at least reach similar rates of new installed capacity as Germany ‘in a few years’.
Macias issues a note of warning, however: ‘With fast growth come spiralling expectations.’ He says EPIA is revising market expectations and compiling real-life data from industry members. However, similar data compiled by EPIA towards the end of 2005 erred on the low side, having predicted the Spanish market would install just 45 MW in 2006 and 50-90 MW by year-end 2007 (way below what actually went up last year). In short, ‘an accurate prediction for the future remains anybody’s guess – as long as the guess is strongly upward,’ says Luis Merino of Spanish renewables research firm and publisher Energías Renovables.Market driver
The main reason for such confidence lies in the recently revised national feed-in tariff for photovoltaic generation, which maintains pay levels that have been in place since the March 2004 regulation. That regulation was the catalyst for the recent photovoltaic boom. Up to 2004, the story of Spain’s photovoltaic market was one of missed opportunities. While Spanish sunshine continued to fuel tourism, the country’s single biggest industry, different attempts at establishing support mechanisms for a photovoltaic market only managed to spur 6.5 MW of cumulative capacity by the end of 2003.
But the 2004 regulation (Royal Decree 436) established a guaranteed tariff for all photovoltaic power fed into the national grid. The so-called feed-in tariff was set at €44.04/MWh (or 575% of electricity-sector average billings) for all PV installations of up to 100 kW in capacity. Previously, the top rate applied only to installations of up to 5 kW, dropping by half for installations beyond that capacity, making larger projects mainly non-viable.
Developer OPDE’s 2 MW Cabanillas array in Navarra uses inhouse trackers from Mecasolar OPDE
As soon as RD 436 came into force, regional industry ministry desks buckled under the weight of thousands of project applications. The bulk of those applications were actually subdivisions of larger projects. The 100 kW limit for the top-rate tariff meant, for instance, that a 5 MW project was separated into 50 lots of 100 kW, each requiring its separate application. However, this year’s revised regulation, rubber-stamped in April under the name Royal Decree 661, puts an end to such fragmentation, stretching the top rate to arrays of up to 10 MW. That rate, now paying €417.5/MWh, is guaranteed for the first 25 years of plant life, dropping to €334.0/MWh after that. The rate will be revised in 2009 for new plant going online as of January 2010.
Furthermore, the new regulation requires developers to forward a deposit of €20 for each kilowatt of their projects’ applications. The deposit aims to deter speculators trying to acquire development and connection rights merely to boost the sale value of properties. Such practices saw combined project applications across Spain swell beyond 6000 MW last year, according to national renewables association Asociación de Productores de Energías Renovables (APPA). The bulk of those applications are no-hopers but nonetheless slow down processing, says Macias.Obsolete cap
Despite regulatory reassurances, Royal Decree 661 failed to eradicate one potential obstacle to growth, namely the 400 MW national objective for cumulative installed PV capacity to 2010, as established by the national renewable energy plan 2005-2010 (Plan de Energías Renovables, or PER). Officially, tariff subsidies are only payable up to the PER target for each renewable technology. Both Anta and Macias see tackling the 400 MW cap as a mere formality, saying the government is already studying, with ASIF, how far to raise it or indeed whether to lift it completely.
Model of OPDE’s 60,000 m2 Solar Energy Centre in Navarra, where it will concentrate in-house solar tracking assembly, plant engineering services and development currently totalling 50 MW but with sites set on 100 MW for 2010 OPDE
The objective-cap conundrum says a lot about the roaring dynamism of Spain’s PV market. What was once considered an objective to spur the market now looms as an almost farcical restriction. In any case, the 400 MW mark will be reached by 2008, according to Javier Gorbeña, Commercial Director General of Isofotón.Tracking
Meanwhile, small and large investors from home and abroad are far from deterred by the cap problem, and development activity remains frenetic. Utility-scale projects are dotted all over the country. More often than not they incorporate double-axis automatic solar tracking systems, optimizing the angle of the PV modules relative to the sun from dawn to dusk. The use of tracking is the norm, especially within the developing Spanish speciality dubbed huertos solares, or solar allotments, in which the developer asks private investors, often local people, to buy at least one module. These modules are usually mounted on trackers, more than doubling project investment requirements but also increasing yields by 25%-40%. However, ASIF warns it is still early days to calculate the operation and maintenance costs of trackers over plant life.The action
In February this year, world renewables major Acciona completed its 9.7 MW Monte Alto array, Spain’s single largest online photovoltaic plant and the third largest in Europe, surpassed only by 12 MW and 10 MW plants in Bavaria. Given Spain’s increased resource, together with the use of solar trackers, Acciona estimates the plant will produce 14 GWh a year, making it Europe’s most productive plant yet online. Claiming to have installed 29 MW of PV capacity to date, all in Spain and all as solar allotments, Acciona is Spain’s top PV operator. The company is also currently building the first 42 MW phase of its 64 MW PV array development in the district of Moura in neighbouring Portugal. In the same district, Acciona is also building a 24 MW module facility – the company’s first – aimed mainly at the export market.
Despite a long list of other projects with capacity figures as high as 25 MW, Monte Alto is the closest yet to reaching double figures in megawatts. Close behind is the 9 MW Granadilla array, the recently connected first phase of a 15 MW project in the Canary Islands, developed by the regional Institute of Technology and Renewable Energy. German developer City Solar has also connected the first 8 MW of its 20 MW Benixama array in Alicante, on the Mediterranean coast. Completion is scheduled before the end of the year. In the Murcia region, local developer Globasol is building its 14 MW Losbosillo project, though none of that capacity is yet online.Wind to sun
Many of the remaining landmark projects belong to the big corporations that are already behind Spain’s huge wind market. Wind developer and leading turbine manufacturer Gamesa claimed 2006 to be the take-off year for its solar division, Gamesa Solar, which both develops projects and manufacturers’ modules (see below). The company recently commissioned its 3.4 MW Aznalcóllar solar allotment in Seville province, of which it will own and operate 1 MW. The remainder is owned by Spanish project partner Idesa, which plans to extend the complex to 13.5 MW.
Another wind developing major, Enerfin, which belongs to Spanish electrical engineering major Elecnor, has started building its 20 MW La Magascona project in the south-western region of Extremadura, scheduled for completion for the end of 2007. The array will use modules supplied in-house from Atersa, which Elecnor bought from America’s bankrupt Astropower in 2004.
A large-scale ‘solar garden’ ACCIONA
Similarly, wind developer and turbine firm Ecotècnia [acquired at the end of June by Alstom – Ed.], is building an 8.2 MW array in the district of Flix in the Catalonian province of Tarragona, north-east Spain, after clinching the turnkey contract with local developer Flix Solar. Ecotècnia has recently completed a double-axis solar tracking facility in the region, which it will use on the project. The company claims to have built PV arrays across Spain totalling 15 MW.
However, solar PV firms with no wind power experience are also gathering pace. The OPDE consortium in Navarra, with 8.8 MW of PV capacity already online, claims a development portfolio of 53 MW, with 4.1 MW of that already being built and plans to connect a further 6 MW by the end of the year. The company is currently building its so-called Solar Energy Centre in Navarra, a 60,000 m2 space centralizing development activity, as well as OPDE’s solar tracker assembly business and plant engineering services.Growing utility stakes
Meanwhile, sector eyes are on utility Iberdrola, the world’s biggest renewables operator, with 6000 MW online, mostly from wind. Compared with that figure, the utility’s PV development stakes hardly make a dent and are mainly wrapped up in a 3 MW installation on the roof and facade of the Madrid headquarters of telephone operator Telefónica. This is the biggest PV building-integrated project in Europe, says Iberdrola. Nevertheless, anticipation regarding bigger PV action from Iberdrola was sparked by a recent announcement that it would use power lines and land space at its existing conventional power stations and substations to build large-scale arrays, though the company has given no concrete details.
Apart from that, Iberdrola’s engineering wing, Iberinco, claims to have built to completion 8.2 MW of PV capacity via turnkey contracts for third parties, with a further 21 MW currently (June 2007) under construction: namely an 11 MW extension to the 600 kW it has already built for Spanish developer client Solarig in the province of Soria, and a 10 MW project for an undisclosed client in the Talayaula district of Extremadura.
More clearly, Spain’s top utility, Endesa, recently announced ground-breaking work on the first 12.3 MW phase of a 20.1 MW array in the San Roque district, near Spain’s southernmost tip in Andalucía region. In recent press statements, Endesa said it plans to build PV arrays totalling 60 MW in Andalucía alone up to 2011. For those and other projects, Endesa has a framework deal for module supplies with Spain’s dominant manufacturer Isofotón, though neither company specifies the overall figures involved.
Endesa’s development plans run parallel to its boosted role as contractor. Engineering division Endesa Ingeniería has signed an agreement to build projects developed in Spain by German developer Geosol (owner-operator of the 5 MW Leipziger Land array in Bavaria). The agreement kicked off with a firm turnkey contract to build Geosol’s 3.78 MW PV array in Granada province. The two companies will also collaborate in joint development of new projects. Meanwhile, Endesa Engineering claims a portfolio of turnkey PV contracts to build 34 MW.Foreign interest
Geosol is just one of many foreign companies to enter the Spanish PV market. ‘The solar resources, together with its legal framework, make Spain one of the most attractive markets for solar investment,’ says Helmut Kantner of Austrian solar developer Enviro Technologies. His company, together with compatriot developer Energetica Energietechnik, recently formed a joint venture with Spanish developer Sunstroom to build the 8.8 MW Los Arcos array in Navarra, with building already having started on the first 1.1 MW phase.
In spring 2007, German solar developer Voltwerk, subsidiary of listed renewables firm Conergy, clinched what it claims to be ‘the largest European framework financing agreement to date for photovoltaics’. The €394 million deal with an undisclosed Spanish bank will back PV projects by local affiliate Voltwerk Energías Nuevas, all scheduled for completion around the turn of 2007-2008, according to Conergy.
More recently, California-based solar integrator PowerLight says it has clinched a framework deal to build 17 MW across Seville and Extremadura for Spanish developer Solarpack Corporación Tecnológica. PowerLight also says it will provide its own solar tracker technology for Elecnor’s 21 MW Hoya Vicentes project in Murcia.Expanding the manufacturing base
German module manufacturer Aleo Solar has also made a strong foothold in the Spanish market after starting up in February 2007 its €4 million 10 MW facility in Barcelona, its first outside Germany. The company claims firm orders already totalling €35 million. Of that, orders for €20 million have come from Endesa and Gamesa combined.
Another relative newcomer, Basque-country based Gamesa Solar, is currently building a new 18 MW module facility in Aznalcóllar. In 2006, the company reported firm contracts totalling 28.4 MW, followed by a further 13 MW over the first quarter of 2007. Gamesa says its aim is to apply its acquired business volume and know-how from the wind sector in order to position itself among the PV module manufacturing leaders.
Given the competition, Gamesa Solar has a long way to go to fulfill its ambition. Isofotón, also a PV cell and solar thermal panel major, continues to dominate the module market and owns 45% of its production capacity, according to IDAE. Isofotón has also embarked on a €182 million modernization and extension of its Málaga facility, backed by a €19.3 million subsidy from Andalucía’s regional government.
Siliken modules at the 2.4 MW La Roda array, by developer Nobesol, in Castilla La Mancha region SILIKEN
BP Solar, whose European headquarters is located in the Madrid district of Tres Cantos, where it produces modules and cells, is currently building new cell production lines to increase capacity from the 55 MW currently to 300 MW, to be completed by the end of summer 2007.
Valencia-based module manufacturer Siliken recently announced plans to double production capacity by the end of the year to 55 MW. Last year, its facilities turned out 15 MW, with machines operating 24 hours a day towards the end of the year. The company expects to produce 36 MW of modules for year-end 2007.Manufacturing new technologies
Nearly all Spain’s module production capacity is for standard silicon cell products. The exceptions are Guascor Foton’s concentrated PV (CPV) cell factory in the Basque region and a 5 MW dedicated CPV line at Isofotón’s facilities, both with big hopes for the future. CPV technology uses optics (lenses and mirrors) to concentrate solar radiation onto high-efficiency cells, which, though more expensive, have very high energy yields. Spain is bidding for world leadership in this technology.
Indeed, an international demonstration project for CPV technology is under way in the Castilla-La Mancha region, run by the Institute for Solar Photovoltaic Concentration (ISFOC). Total capacity will be 3 MW – more than the world’s combined installed CPV capacity to date. ISFOC has already assigned 1.7 MW through an international tender, split between Isofotón, Germany’s Concentrix and America’s Solfocus. A second tender for the remaining 1.3 MW was issued in May. Guascor Fotón decided to withdraw in order to concentrate on the 4 MW of CPV capacity it is now building across Navarra and Extremadura.
At the same time, two newcomers have announced major plans for factories producing amorphous thin film modules, currently the darling of venture capital firms, especially in the US but also in Germany. The attraction of this technology lies in reduced production costs, which, purportedly, offset lower energy yields. Furthermore, thin film technology uses either no silicon or a tiny fraction compared with conventional modules, especially important given the currently tight silicon supply chain.
Most recently, the regional government of Andalucía approved a €14.6 million subsidy backing a €148 million thin film module facility in Cadiz planned by Hungary-based Genesis Energy. The company subsequently confirmed the project, adding that the facility was one of three planned worldwide. The others are for Singapore and Budapest), with a combined capacity of 250-300 MW, though the specific capacity of the Cadiz facility is yet to be revealed. The company schedules all three facilities to be operating by 2009.
Meanwhile, a 40 MW thin film facility, among the world’s largest, is already being built in northernmost Galicia region. The owner-developer is Spanish consortium T-Solar, led by engineering group Isolux and backed by a 30% capital stake from Galicia’s regional government. American thin film specialist, Applied Materials, landed the turnkey contract to build the factory, scheduled for completion in 2008. Isolux says it is developing its own solar arrays to create an initial market for T-Solar production.Southern silicon
But the industrial plan that is perhaps sending the biggest waves across the Spanish sector is the advanced project to build a €415 million polysilicon processing facility – southern Europe’s first – in the Los Barrios district of Cadiz. The first €250 million phase, with a capacity to produce 2500 tonnes of silicon a year, is scheduled for completion in 2009. Ramp up to 5000 tonnes is planned for 2010. The consortium running the project is Silicio Solar, led by Isofotón and Endesa, with minority stakes from the regional government, semi-public savings bank Unicaja and other local firms.
With only nine other solar-dedicated silicon production lines in the world, the Los Barrios factory, together with several other factories and extensions planned in Europe, will help alleviate currently overstretched and overpriced silicon supplies, says Macias.Challenges
For Macias, the involvement of big corporations in developing PV capacity has been a great and necessary boost for the market, creating economies of scale. However, he says this is also because the Spanish administration process is so complex that it requires corporate know-how and resources to run the gambit, discouraging smaller developers. Both ASIF and EPIA are calling for simplification, suggesting IDAE take the lead in co-ordinating and homogenizing processes across Spain’s 17 different regions responsible for plant permits.
Macias also warns of growing interest rates: ‘PV plants are currently attractive, with internal rates of return [IRR] at 7% or more,’ he says. But, indicating the key role of project financing, he says: ‘The attraction could fast wane if interest rates approach 10%, reducing margins.’ For Macias, Spain’s sector has too many eggs in the utility-scale basket. Over 80% of all PV installations in Spain are over 5 kW, according to Macias. By contrast, in Germany, 50% are in the 5 kW range, reflecting the greater number of small, domestic rooftop installations arising out of a wider social commitment to solar power. ‘That altruistic commitment is not interested in profits but in broader social and environmental benefits,’ says Macias. It also ensures customers for modules, regardless of IRR and percentage points. The Spanish PV sector and administration needs to promote such social and environmental commitment among Spaniards, Macias adds.
Mike Stirzaker is a freelance writer based in Spain, specializing in renewable energy issues.
e-mail: [email protected]