Wind power requires regulatory stability, legal certainty and attraction of investors to meet decarbonization objectives

The ‘Wind Power and Market’ conference, the first meeting of the wind power sector in 2023 and organized by the Wind Power Association (AEE), today brings together more than 250 experts to analyze the economic management of wind farms in the new energy scenario.

In the current complex geopolitical and economic context, wind power faces various challenges as it is a key technology for our energy system. The wind sector considers regulatory stability, legal certainty and the attraction of investors towards trustworthy environments as the main vectors for progress towards decarbonisation objectives.

Juan Diego Díaz, president of AEE, at the inauguration of the conference, pointed out as transcendent the public consultation process for the reform of the electricity market, which was recently initiated by the European Commission, since it will set the rules of the game for the business model of the renewable sector in Europe. «From AEE we are clear that a good market design must be based on a series of fundamental pillars such as, among others, guaranteeing the freedom of all actors to opt for the various tools or mechanisms, without limitations or obligations; as well as providing attractive environments for investors by making all the possibilities of operation coexist in the market, in addition to guaranteeing regulatory stability and Legal Security, ensuring that in no case are there retroactive effects on the contracts in force, nor impact on the agents of the sector that may jeopardize the profitability of their investments.

In the month of January 2023, in Europe, the prices of the electricity markets fell compared to December. The monthly average price was less than €135/MWh in almost all markets. This behavior is due, in part, to the decrease in gas prices and CO2 emission rights, as well as the high wind resource.

In Spain, in 2022, wind energy has meant a saving of €8,252 million in the cost of energy in the electricity market. On a specific day, January 17, the price of electricity fell to €5.1/MWh thanks to wind power. This is the lowest price since January 2021.

In 2022, wind power has not grown at the rate necessary to meet the objectives of the PNIEC
The president of AEE has highlighted the enormous effort that has been made in recent months to reach the famous milestone of January 25 with the largest number of renewable files resolved by the Administrations in regard to Environmental Impact Statements (DAY).

According to PREPA calculations, 10.6 GW of positive wind DIAs and 3.8 GW of negative DIAs have been granted since October 1, 2021.

«In the future, the processing rate must be maintained to avoid the expiration of projects in the coming months. Let us remember that during the months immediately after the approval of RDL 23/20, many projects began their processing, and therefore they are at risk of expiring as of February. On the other hand, the projects that obtained a positive DIA before January 25 will have to achieve the subsequent administrative milestones before the expiration dates of the files, which will imply a considerable effort for the different administrations. All of this is tremendously important in order to meet the objectives of the PNIEC. In 2022, wind power has not grown at the rate necessary to meet this objective, that is, to incorporate 2,200 MW per year,” Díaz highlighted.

The effect of going from a drought of projects to a massive accumulation, motivated by the fulfillment of some milestones in the regulation, although it may provide a favorable theoretical scenario for the future, generates industrial tensions and saturation in the supply chain that represent a great challenge. for the supply chain.

«Our industry needs sustainability and comfort throughout the value chain to stay and be competitive. The industry needs to have market visibility in the longer term, and not just for the next 2 years, in order to carry out adequate strategic planning that leads to cost optimization”, the president of AEE qualifies.

It is essential to advance at a constant and planned pace based on the real demand at each moment, and thus reach 2030 with the renewable contribution established by the PNIEC, always maximizing the benefits in the territories and respect for the environment. Administrative processing is one of the main workhorses and, therefore, all countries must join forces and prioritize it as a critical issue for our energy, economic and industrial resilience.

Current situation of the wind industry
The president of AEE reflected on the efforts of the wind industry to remain competitive, manufacturing wind components in Spain and throughout Europe. The competition generated by the Chinese industry, which has government structural support that allows it to achieve average prices below European standards, is already a reality. On the other hand, the mechanisms to attract industrial and technological investment approved in the United States with the IRA (Inflation Reduction Act) are having a serious impact on the export dynamics of wind components manufactured in Spain. In this regard, the Green Deal Industrial Plan with its Net Zero industrial Act are the fundamental tools, but they must be agile and precise to guarantee the permanence of industrial investments in our continent.

renewable auctions
Another of the topics to be analyzed in the ‘Wind Energy and Market’ conference is the current auction model in Spain, which has been redesigned and refined, but there are still aspects that can be improved. We must manage to recover them as attractive and effective tools for the incorporation of renewable power in the system, because they are still necessary. Its design should maximize the benefits that different technologies bring to society and the economy. The last auction, held at the end of 2022, maintained quotas for technology, a positive change; However, the exclusive focus on price has been shown to be wrong and, above all, a death trap for the value chain based in our country. For this reason, we believe that other aspects should be maximized, such as efficiency in the use of networks, annual production capacity, the reducing effect of consumer prices and the benefit for local environments. We hope that the next calls can reflect this approach to value.

The priority is the Energy Transition and decarbonization
Carmen Becerril, president of OMEL, has participated in the opening of the day. In her intervention, she highlighted the market model towards which we must advance and the analysis models that we must take into consideration.

«In the midst of all the turbulence of electricity prices, the reform of the electricity market is being proposed, which is already 25 years old and where the system has worked in all these years responding with signals that are given from the economy. But the priority at the moment is the Energy Transition and decarbonisation, more than market reform», indicated the president of OMEL.

The issues that are the object of attention to ensure the Energy Transition, has indicated Carmen Becerril, which are electrical interconnections; – fundamental for the development of renewables-; the flexibility; – that must be present in the management of demand and production processes-; – and encourage electrification.

Becerril has concluded by indicating that one of the essential elements for the markets to have a future is to modify the regulations that regulate them and separate them from financial regulations. “The market must not be killed because it has high prices, there are other structural problems to attend to,” Carmen Becerril highlighted.

More than 250 professionals at the benchmark event for the wind energy sector
A conference in which more than 250 professionals from the main companies in the sector have gathered, where we have analyzed, among other topics, the prospects of the future electricity market, the bankability of hybrid and storage projects, the PPAs for the production of hydrogen and its synergies with wind power for future projects, access permits and connection to the Grid, the integration of renewables into the most advanced European systems and other current issues that affect the development and activity of the wind sector.

The ‘Wind Energy and Market 2023’ conference is sponsored by VIPs from EDP Renewables, Endesa, Greenalia, Hitachi Energy, Iberdrola, Naturgy, Repsol, Siemens Gamesa Renewable Energy and Vestas; and as collaborating sponsors Axpo and Kooi.