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Spain innovates floating PV regime to handle high energy prices

01 April 2022 Cristina Brooks

The Spanish government's strategy to cope with high energy prices will see floating PV installed in reservoirs connected to hydropower dams.

The idea was hidden within a package of measures shielding Spain's economy from the impacts of war in Ukraine amid high fuel costs leading to protests. It was put out for a public consultation open until 7 April, which may mean potential changes to the proposed royal decree.

Seeking to build floating PV plants on dammed reservoirs, the government wants to pass a regulation to determine what conditions must be included in licensing and 25-year concessions to run the PV plants, said Spain's energy transition ministry, MITECO.

Spain has around 100 state-owned reservoirs, as natural bodies of water like rivers are considered public assets.

Up to three floating PV farms per reservoir could be combined with each hydropower dam to increase its overall capacity and optimize its use. "These plants will also have higher energy efficiency than terrestrial systems thanks to the cooling effects of the water and the reduction in the presence of dust," said MITECO.

Spain intends to use new floating PV plants towards meeting the aim of 74% renewables within power generation by 2030, laid down in its Climate Change and Energy Transition Law.

However, Spain may need more time to develop the novel scheme than is available in the current energy crisis. "Spain's plan to create a framework for installing solar panels on public dams would contribute to an accelerated uptake of such installations and enable an even greater deployment of PV in Spain," said S&P Global Commodity Insights' Research and Analysis Manager, Solar and Clean Energy Technology, Josefin Berg.

"However, it is likely to take a while to roll out the new scheme and develop the projects, so this new framework will not be a near-term solution for Spain's electricity challenges," she said.

MITECO also intends to study the evolution of floating solar technology, as the concept is still new in the country. "Few countries have to date put in place legislation to specifically address floating PV," said Berg.

China leads in floating PV

Floating PV tends to be expensive, and has traditionally been overshadowed by technologies such as ground- and roof-mounted solar PV.

While Spain is Europe's second-largest market for traditional PV with 3.8 GW installed last year, it is looking to regulate and expand its floating PV sector for the first time.

China is already well in the lead. Government Feed-in-Tariff subsidies in China advanced the development of some 1.2 GW of floating solar capacity, more than half of the global capacity of 2.2 GW in 2020, a report by S&P Global Commodity Insights found.

Last year, Huaneng Power International (HPI) launched a 320 MW floating PV facility in China's Shandong province, currently the world's largest.

Through 2025, growth in floating PV will be led by India, South Korea, Vietnam, and mainland China, which together are forecast to account for 56% of all installations. In Indonesia, a developer is currently building the massive 2.2 GW floating PV project at the Duriangkang Reservoir.

The Netherlands had the most floating PV capacity in Europe in 2020 and France is home Europe's largest floating solar plant, developer Akuo Energy's 17 MW O'MEGA1 project.

Renewables to relieve Spain's electricity crisis

The European Commission foresees regional natural gas shortages caused by the war in Ukraine adding to the costs EU consumers face.

Under more pressure after struggling with high electricity and gas costs for most of last year, Spain and Portugal gained an "Iberian exception" to EU rules that forbid adjusting power prices at a meeting on 25 March.

Spain has some of the highest electricity prices in the EU (on average €0.22/kWh) according to research from the Polytechnic University of Valencia.

The package of policies in The National Response Plan approved this week by the Council of Ministers provides relief for the "most impacted sectors and vulnerable groups."

In the proposed package, Spain plans to spend €16 billion ($17.69 billion) to cope with Ukraine-war-related energy market shocks while it promises aid for refugees, boosts cybersecurity, doles out loan guarantees for distressed businesses and financial support for agriculture.

Spain also offered a €1.4 billion subsidy to lower fuel costs for the transportation sector, after truck drivers in the country went on nationwide strikes over fuel costs.

Aiming to tackle high energy bills, Spain's government wants to tweak energy costs in ways that "prevent an inflationary spiral" and has suspended certain power taxes, lowered grid fees for energy-intensive industries, and offered financial support for sectors that use more gas.

Renewable generators will be able to sell their electricity outside the wholesale market from 1 January 2023 to expand the cheap power available for households.

Pipelines are being readied for renewable gases including hydrogen, and grid operators must allow 10% of grid capacity to be allocated to a 7 GW expansion of the consumer and industrial rooftop solar scheme.

Spain also pledged to speed up the permitting of 7 MW of existing wind power and up to 150 MW of PV projects, in line with an EU-level policy proposal meant to soften the impact of high gas prices, REPowerEU.

Posted 01 April 2022 by Cristina Brooks, Senior Journalist, Climate and Sustainability

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.


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