Low electricity prices: a brake on photovoltaics

Interesting article in Energía estratégica, where Milena Giorgi interviews Carmen Izquierdo, CEO of nTeaser. In it, they mention that the Spanish electricity market has experienced nearly three months with prices reaching €0 per kWh for more than six hours.

With a strong renewable generation from wind and photovoltaic sources, a slight decrease in demand, and hydro reservoir levels two points above historical levels, analysts believe these trends will continue until the end of the year. Furthermore, everything indicates that the trend will worsen in the coming years.

“The drop in the pool price in recent months has generated a lot of uncertainty, and we have seen quite a few changes in renewable investment dynamics.”

Additionally, she points out that there is more interest and better margins in the sale of operational plants, as EPC prices continue to decline. On the other hand, the large number of projects ready with construction permits makes EPCs the bottleneck at the moment. This year, 23 parks of over 50 MW are expected, with a total capacity of 2.2 GW, of which approximately 2 GW are photovoltaic.

This scenario creates uncertainty about the profitability of future developments, which is why many are starting to opt for (or at least consider) the implementation of batteries. In this way, they aim to protect themselves and cover their backs against future curtailments and low electricity prices during midday.

Certainly, a good example of what could happen in Spain can be found in California. On April 16th, two significant milestones were reached:

  • Batteries became the largest source of supply on the grid.
  • Batteries exceeded 6 GW of power for the first time.

nTeaser believes that this situation will result in a cleaning and purification of the sector. The sale of projects in early stages of development is now a thing of the past.

Imanol Matanza Medina, Solarletter #16