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Spain is the world's third largest producer of wind power, ranks second in solar energy development and is seen widely as a model for the creation of a genuinely green economy. But as Chris Webb discovers, there is much more to this champion of renewables.
Electricity demand in Spain has doubled in the last 20 years, spurred by a burgeoning economy that has grown every year from 1994. An ambitious building programme to accommodate a growing expatriate community seeking a better life or retirement in the sun is but one contributor to Spain's meteoric growth.
A seasonal tourism industry has skewed power demand like few others in Europe or, for that matter, worldwide. Yet Spain's domestic power industry has responded with robust enthusiasm.
Spain fell into recession in the third quarter of 2008, and now suffers from one of the highest unemployment rates in Europe (a reported 18.5 per cent). It could be left to an underlying sturdy power industry to haul the country's fortunes back from the brink with plans to create a pioneering blueprint for a landmark European green economy.
The industry is in undoubted rude health. Four major power operators - Endesa, Iberdrola, Union Fenosa and Hidrocantabrico - have constructed an eclectic mix of fossil fuelled power generation contiguous with nuclear and renewables that is virtually without parallel anywhere.
Spain was also a pioneer in unbundling its electricity industry; Red Electrica de Espana, the country's grid operator, was the first of a breed that was to roll-out across the European continent.
And few in Europe have done more to invest in clean energy. Iberdrola, one of the continent's biggest power companies, manages the largest renewable energy portfolio in the world. The Spanish energy sector has undergone many positive changes in recent years. They include an increase in the use of natural gas and renewables in power generation leading to increased security of supply and reduced environmental impacts, further liberalization of its markets ahead of European Union (EU) directives and the entrance of new players into the energy market competing with long-standing incumbents.
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| Iberdrola Renovables is the biggest provider of renewable energy in Spain. Source: Iberdola |
In short, the energy industry has coped very well in satisfying the rapidly increasing demand for energy. Yet despite all these positive developments, the energy sector in Spain and the Spanish government will face a number of challenges over the coming years. One of the most pressing issues is that Spain's demand for electricity has grown so rapidly and that this growth shows few signs of abating in the longer term. Spain's indigenous energy resources are limited and unlikely to increase significantly, with the exception of renewable energy production, in particular wind power.
Furthermore, weak cross-border gas and electricity interconnections and low electricity trade compared to total demand suggest a situation not dissimilar to that of an island. This, says the International Energy Association, poses risks for Spain's security of supply that will become greater as consumption itself increases.
Spain has taken significant steps recently in order to sidestep its fuel import dependence. Coincidentally, the reduction of greenhouse gases has also pushed forward clean and green energy alternatives. Consumed by a target of generating 30 per cent of its electricity needs from renewable energy sources by 2010, with half of that amount coming from wind power, Spain has already made vast progress in this direction. As long ago as 2006, 20 per cent of the total electricity demand was already being produced from renewables, and in January 2009 the total electricity demand produced in this way reached 34.8 per cent.
Having an installed capacity of 16 740 MW at the end of 2008, representing a rise of 1609 MW for the year, Spain's position at the top table of wind power producers is undisputed. More than 11 per cent of Spain's electricity came from wind power in 2008.
The largest producer of wind power in Spain is Iberdrola, with 27 per cent of capacity, followed by Acciona (16 per cent) and Endesa (10 per cent). Steady growth in capacity was expected for 2009, despite the credit crunch, due to long-term investments. Overall, Spain's wind farms are on track to meet a government target of 20 GW in capacity by 2010.
In the space of a decade wind power development has increased twenty times. On particular windy days, wind power generation has exceeded all other electricity sources in Spain, including nuclear.
In Castilla La Mancha, where the fictional Don Quixote tilted at windmills, wind farms helped Spain to a world record, producing more than 40 per cent of electricity demand over a short period. This success is largely due to Iberdrola Renovables, the world's leading wind power company, which has boosted its installed capacity over the past 12 months by 1990 MW, to 10 477 MW, representing a 23.4 per cent increase. The company claims savings of almost 8.5 million tonnes of CO2 per year, while supplying power to some 21 million Spaniards.
The company is also a major international operator. By the end of September, its installed capacity outside Spain had reached 50.3 per cent of the total, exceeding domestic capacity for the first time. Iberdrola has operations in 23 countries worldwide.
Among the 17 countries in which Spanish companies operate, the highest amount of installed capacity is in the United States having a total of 3460 MW, followed by Portugal with more than 1160 MW.
Spain is also a net exporter of equipment, services and technology associated with the industry, and progress in Spain has attracted a noteworthy number of foreign investors. In fact, according to the latest data collated by the Spanish Wind Energy Association, exports of the wind turbine manufacturing sub-sector in Spain alone reached €2234 million ($3349 million) in 2008.
If exports of components and services are also considered, total wind energy associated exports from Spain stood at an impressive €2950 million at 2008 year end, up 15 per cent on the €2550 million achieved in 2007.
Moreover, a team of engineers from the University of Zaragoza believes it is "technically viable and economically reasonable" for wind energy to account for almost a third of Spain's overall energy production. The report, prepared jointly with the European Wind Energy Association, says the number of jobs generated by this sector in the EU has increased by 226 per cent since 2003.
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| The Gavilanes wind farm in the Murcia Region in the southeast of Spain contributes to Iberdrola being the country's largest wind power provider. Source: Iberdola |
By 2030 wind farms could supply as much as 30 per cent of Spain's electricity needs, says Jose Luis Bernal, of Zaragoza's Department of Electric Engineering.
His team claims that an energy mix, with wind energy providing 30 per cent, solar energy 20 per cent and gas turbines a further 20 per cent (10-15 per cent biogas and 5-10 per cent natural gas), is technically and economically viable in Spain. The remainder would be made up of hydroelectric, geothermal and biomass energy (20 per cent between the three) and energy from coal fired power plants (ten per cent), which should apply CO2 capture techniques in order to reduce their impact on global warming.
The proposal factors-in the issue of wind turbines potentially standing still when there is no wind, looks to a contribution by fossil fuels of less than 20 per cent but excludes the use of nuclear energy. "According to our calculations, the cost per kWh could be maintained at between 5.5-6.1 Euro cents", says Bernal. It could be good for jobs, too, he adds, with up to 20 500 being directly employed in Spain.
The Spanish government wants to increase domestic demand for alternative energy by having the government help pay the bill, and through a combination of new laws and private investment it could compel millions of Spaniards to go green whether they like it or not. The hope is to create a million green jobs over the next decade. The Spanish government believes renewable energy could give 800 000 jobs back to the million construction workers who lost their jobs in 2008.
In 2008, Spain accounted for half the world's new solar power installations in terms of wattage, thanks to government subsidies to promote clean energy. But late last year, as the global economic crisis worsened, the government dramatically scaled back those subsidies and capped the amount of subsidized solar power that could be installed.
It would be true to say that Spain's hopes of improving its lead in solar power have taken a significant dive since the government slammed on the brakes. Were that not enough, the sudden change sent ripples across the global solar industry. Factories worldwide that had increased production of solar power components found that demand for solar panels was in freefall, having a disastrous effect on prices.
Yet Spain remains one of the most attractive countries for the development of solar energy, as it boasts more available sunshine than any other European country, and the government is committed to achieving a target of an installed solar generating capacity of 3000 MW by 2010. Spain is the fourth largest manufacturer in the world of solar power technology and exports 80 per cent of this output to Germany.
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| Andasol 1 is the first solar thermal plant in Europe and is based in Granada, Spain. Source: Solar Millenium |
In a significant boost for solar power, a ministerial ruling in March 2004 removed economic barriers to the connection of renewable energy technologies to the electricity grid. The Royal Decree equalizes conditions for large-scale solar thermal and photovoltaic plants and guarantees feed-in tariffs.
Three years later, in March 2007, Europe's first commercial concentrating solar power (CSP) tower plant was opened near the sun-baked southern Spanish city of Seville.
The 11 MW plant, known as the PS10 solar power tower, produces electricity from 624 large heliostats. Each of these mirrors has a surface measuring 120 m2 that concentrates the sun's rays to the top of a 115-metre high tower where a solar receiver and a steam turbine are located. The turbine drives a generator, producing electricity.
Andasol 1 solar power station is Europe's first parabolic trough commercial power plant (50 MW), located near Guadix in the province of Granada, Spain.
The plant went online in November 2008, and has a thermal storage system which absorbs part of the heat produced in the solar field during the day. This heat is then stored in a molten salt mixture and used to generate electricity during the night, or when the sky is overcast.
The Solar Tres project, a 15 MW solar power tower plant and in the hands of the Spanish company SENER, is employing American molten salt technologies for receiving and energy storage.
Its 16-hour storage system will be able to deliver power around the clock. The Solar Tres project has received a €5 million grant from the European Commission's Fifth Framework Programme.
Spain is the epicentre of CSP development, with 22 projects amounting to 1037 MW under construction, all of which are projected to come online by the end of next year. The current Spanish Royal Decree, which calls for 500 MW of CSP by 2010, has been largely responsible for the dramatic increase in this technology's development activity in Spain since 2008.
However, a review of Spain's feed-in tariff scheme is underway and its outcome will have a significant impact upon 6 GW of projects in the pipeline.
The success of Spain's CSP position in the longer term will largely depend on the government's willingness to continue fostering CSP development through feed-in tariffs, according to market analysts, Emerging Energy Research.
In common with many countries, Spain shares a strong public opposition to nuclear power plants. But Prime Minister Jose Luis Rodriguez Zapatero's order that the country's oldest nuclear power plant should be shutdown by 2013 has proved unpopular in some circles. Earlier, Zapatero had pledged to decommission nuclear plants once their 40-year lifespan expired, which in the case of the Santa María de Garona station would be in 2011.
The issue has assumed a higher than usual political profile, however, and the conservative Popular Party has said it will overturn the government's decision if it wins the 2012 general elections. It will, it said, extend Garona's lifespan until 2019, which is the date approved by Spain's nuclear watchdog agency in a non-binding report.
Garona generates a relatively insignificant 1.4 per cent of the country's electricity and its 466 MW reactor is Spain's smallest, but there is a political principle at stake, and observers believe Spain is watching events in Germany, which may also overturn its own dismissal of nuclear power, before showing its hand. Spain's nuclear industry, which supplies 20 per cent of the country's power, is concerned that any final decision now would set an irreversible precedent.
Spain's first commercial nuclear power reactor began operating in 1968. In 1964 construction started on the first of three nuclear power reactors - Jose Cabrera, Zorita, a small pressurised water reactor.
Two years later construction of Santa Maria de Garona, a medium-sized boiling water reactor was started, followed two years later by Vandellos-1, a medium-sized gas-cooled reactor similar to the UK's Magnox units. This is the only one to have so far closed down. This first generation of Spanish units - all turnkey projects - gave practical experience with three different designs, and led to a focus largely on PWR types in the 1970s.,/p>
In 1972, ENUSA (Empresa Nacional del Uranio SA, now ENUSA Industrias Avanzadas SA), a state-owned company, was set up to take over all of the nuclear front-end activities. That same decade, construction was started on a second generation of seven reactors, five of which were completed. These involved local engineering companies Empresarios Agrupados and INITEC and the state-owned manufacturer ENSA (Equipos Nucleares SA).
In the early 1980s, construction of a third generation of five plants was started, but following the 1983 moratorium, only two were completed - Trillo-1 and Vandellos-2. In 1994 the moratorium was confirmed and five units under construction were abandoned.
The 1600 tonnes of uranium used in Spain each year is imported. There are no conversion or enrichment facilities in the country, but ENUSA owns 11 per cent of Eurodif, with a large diffusion enrichment plant at Marcoule in France. It also contracts for other conversion and enrichment services abroad.
Since 1983, Spain's policy has been for an open fuel cycle, with no reprocessing. The plan for spent fuel envisages initial storage at each reactor for ten years. Meanwhile research will progress on deep geological disposal as well as transmutation, with a decision on disposal to be made after 2010. Granite, clay and salt formations are under consideration. Waste management and decommissioning is funded by a levy of about one per cent on all electricity consumed.
National Grid operator Red Electrica and analysts say that Spain is not yet ready to do without the baseload provided by nuclear power, and most reactors will likely remain in service for decades.
As some of Europe's wealthiest countries climb out of recession, analysts believe Spain is best suited to benefit in the power sector, thanks chiefly to its green ambitions. But it must, they say, address key issues arising from its 'island status' and relative isolation from the remainder of Europe. Only then will the seeds of its efforts in developing a robust renewable inventory bear fruit.
Endesa is the leading electricity company in Spain, having more than 24 million customers. It also has a strong power generation presence in Latin American nations such as Chile, Argentina, Colombia and Peru, and is present in Brazil. It is a significant player in the energy sector of the European Mediterranean region, especially Italy, and it is active in other European countries.
Endesa's total installed capacity in Spain is 24 228 MW, of which 22 194 MW - which does not include Nuclenor SA´s nuclear capacity - relates to the 'ordinary regime' and 2073 MW to renewable and combined heat and power. Some 17 277 MW are for the mainland electricity system and 4917 MW to the non-mainland systems: Balearic Islands, Canary Islands, Ceuta and Melilla.
Last year, Iberdrola succeeded in keeping overall production stable at 104 514 GWh, a decline of just 1.8 per cent, which was well below the five per cent drop in demand. Distributed energy showed a 16 per cent increase to 150 650 GWh, of which more than half was outside Spain.
Iberdrola Renovables has strengthened its position as a global leader in terms of both capacity and output. Installed capacity has grown by more than 23 per cent from September 2008 to 10 477 MW at the September 2009 close. By the end of the third quarter, its capacity outside Spain reached 50 per cent of the total, surpassing domestic capacity for the first time.
Grupo Hc Energía (Hidrocantabrico) consists of a number of companies dedicated to the generation, distribution and marketing of electricity. Along with Naturgas Energia and EDP Renovaveis, the company is also involved in natural gas utilization and renewable energy, putting a clear emphasis on diversification, growth and sustainable development.
Union Fenosa, part of Gas Natural, in 2008 reported the best set of financial results in its history, despite a less favourable energy market. The net profit attributed to the parent company rose in 2008 to stand at €1.194 billion, an increase of 21.1 per cent on the previous year.