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According to findings from UK company Aurora Energy Research, and reported by Bloomberg, the overproduction of solar power in Spain has caused a price decrease.
The report highlights that this sharp decline might result in a hiatus of certain projects due to hindered profitability.
Aurora Energy Research additionally highlighted that the oversupply of clean energy Europe-wide contributed to decreased electricity prices – which fell to below zero on several occasions.
Storage
The overproduction is so vast that increased top-end storage may not be enough to even out the market. The company notes that Spain’s oversupply is causing the average price generators can earn in comparison to the overall average energy price (“solar capture rates”) to fall.
For Aurora Energy Research, this shows a “growing cannibalisation issue as solar buildout continues” which storage could mitigate but not cure.
Spain saw energy prices in April fall to their lowest rate since 2013, despite the country’s reputation as one of the sunniest in Europe (Alicante often sees 349 sun hours per month).
To balance the playing field, the Spanish government aims to add 12.5 GW of BESS and thermo-solar storage by 2030.
Comparisons
In the report, Aurora Energy Research’s forecasts come from comparisons to California – as the sunny US state also receives half of its power from renewables.
Despite adding 11.2 GW of storage, California hasn’t been able to entirely mitigate its drop in energy prices. The state still “faces challenges from oversupply”: a trend that could be replicated in Spain.
However, 98% of California’s solar projects are co-located with BESS, whereas Spain only has 3.8% of its planned projects with BESS.
California required a constant production of 25 GW avg. to meet demand in 2023. Aurora Energy Research calculates that Spain is close to this figure, coming in at 26 GW avg. Both California and Spain will require 35 GW of PV installed by 2024’s end. |
