Poyry : Pöyry Energy Consulting Breakfast, Madrid

On Friday 5th April, Pöyry's Madrid office organised a new 'Pöyry Breakfast' open to a wide audience of nearly 200 people from the power sector, including investors, developers, banks, power companies, energy associations, and regulatory bodies.

On this occasion, Pöyry focussed on its independent analysis of Spain's National Energy and Climate Plan 2030, recently proposed by the Spanish Government to the European Union. All European countries have now submitted their NECPs, describing their target contributions to the recently agreed joint European objective, of reaching 32% of renewable contribution over final energy by 2030.

The Spanish NECP is extremely ambitious, with an overall target renewable penetration of 42% over final energy, which implies 74% on the national electricity sector, and 77% on the mainland power system. This compares to the current 17% over final energy, and 40% in the power sector. Reaching this target implies installing new wind and solar capacity at a much higher pace during every single year of the next decade, than the highest capacity installed in any single year of the last two decades.

But potential bottlenecks in reaching such a pace of nearly 6GW/year of wind and solar capacity, plus Pöyry's estimate of an additional 0.7GW/year of wind repowering, are not the only problems. Pöyry's detailed modelling of the power sector shows that, even in a very 'friendly' scenario for the integration of massive volumes of renewable energy, with high interconnection capacity, more new storage and 5 million electric vehicles, there would be abundant RES curtailments and frequent periods of low market prices. Additionally, and counterintuitively, Pöyry's analyses show that batteries are not profitable in this landscape, which implies that storage is only possible under regulated support schemes, and this presents serious regulatory challenges.

But that's not all, Pöyry has modelled alternative scenarios which are 'less friendly' to the integration of renewable capacity, with more nuclear capacity than assumed in the NECP, less interconnection and less storage capacity, in order to illustrate what the market could look like if those alternative scenarios materialise, which by the way Pöyry considers much more probable. The resulting curtailments of renewable power and the estimated revenues for wind and solar capacity, present a market environment which is not only inefficient in the integration of RES power, but also only compatible with a strong regulation of all technologies, potentially including even nuclear capacity.

On the economic aspect, there is good news, given that Pöyry has projected that if the NECP were to be effectively implemented, the resulting costs can be absorbed without increases in the end-user prices to end-consumers. Which doesn't mean that the proposed NECP is the cheapest way of reaching the ambitious RES targets, and this is pending work for the sector, and for Pöyry.

Pöyry stays proactive in assessing and contributing to the future energy policies!

For further information, please contact Javier Revuelta, [e-mail]