BMI View: We maintain our muted outlook for the Spanish renewables segment this quarter as a n unsupportive regulatory framework and energy policy uncertainty due to the political stalemate after the December 2015 general election , will mean investor interest and confidence will remain weak. While Spain aims to restart growth through the introduction of a competitive subsidy scheme, the first renewables capacity auction suggests that the race to the bottom bidding dynamics could heighten the risk of contracted projects being commercially unviable.
|e/f = BMI estimate/forecast. Source: National sources, BMI|
|Generation, Non-Hydropower Renewables, TWh||66.844||67.240||67.926||68.436||69.083||69.841||70.622|
|Generation, Non-Hydropower Renewables, % y-o-y||-3.783||0.592||1.020||0.750||0.946||1.097||1.119|
|Capacity, Non-Hydroelectric Renewables, MW||30,916.6||31,276.1||31,695.7||31,935.7||32,145.5||32,312.4||32,489.3|
|Capacity, Non-Hydroelectric Renewables, % y-o-y||0.1||1.2||1.3||0.8||0.7||0.5||0.5|
Latest Updates And Structural Trends
Abengoa, Spain's largest renewable energy company initiated insolvency proceedings in late November 2015. Whilst the outlook for Abengoa has been precarious for a number of years - owing to its significant debt pile, the highly leveraged nature of the company and domestic energy sector woes - the company is now heading towards bankruptcy. Abengoa has four months to renegotiate with creditors, according to Spanish Law. The financial challenges facing the company are reflected in Abengoa's share price, which has fell by 90% between mid-July and December 2015. We stress the Spanish banking sector remains exposed to Abengoa's troubles - with the three Spanish Banks Santander, CaixaBank and Banco de Sabadell reportedly holding the largest debt shares, which in Santander's case amounts to EUR1.5bn. We expect Abengoa's economic troubles to warrant greater caution on behalf of Spanish banks funding renewables companies over the next years.
The December 20 general election in Spain has, at the time of writing, failed to produce a workable governing coalition. The result is continued uncertainty over the direction of energy policy over the next years. All opposition parties aim to roll back the punitive reforms implemented by the former People's Party government's punitive subsidy cuts somewhat, but, we stress the PP still got most votes. We also believe Spain's significant electricity tariff deficit means a new government will struggle to move away from an austere renewables policy. Additionally, disagreements between the smaller parties are likely to hinder the formation of a governing coalition of smaller parties.
The first outcome of the first reverse renewables capacity auction in Spain was announced in January. Bids were registered on all of the 500MW of wind capacity and 200MW of biomass capacity, but we stress the winners are committed to deploy projects without subsidy support. We believe this only reflects a part of the Spanish renewables sector and the low bids heightens the risk of winning projects ending up not being commercially viable.
Spain's renewable energy industry is one of the most developed in Europe and total installed renewables capacity is nearly 30.9 gigawatts (GW, BMI 2015 estimate) - the third highest in Western Europe after Germany and Italy. Additionally, the contribution made by non-hydro renewable electricity to Spain's total power mix is substantial (roughly 25%), but this amount fluctuates on a monthly basis, depending on climatic conditions, power demand and thermal power output.
The Spain Renewables Report researched at source contains BMI Research's assessment of the current renewables market in Spain. The report also contains historical data together with forecasts to end-2018 covering electricity generation (TWh) and electricity capacity (MW).
The renewables sectors covered in the report include Wind, Solar, Geothermal, Tidal and Wave, and Biomass (See Table of Contents for exact coverage). The report also features details on government green energy agendas and funding opportunities, as well as presenting a detailed list of key renewables projects currently being planned or undertaken in Spain, their capacity, the timeframe of construction and their current status.
The report discusses the various energy policies currently in force, including targets, subsidies and the relevant infrastructure developments or limitations which might impact on renewables growth, analysing the potential effects of regulatory changes in conjunction with the background macroeconomic outlook. Finally, there is a general overview of the competitive landscape in Spain, together with a detailed summary of the main utilities and manufacturers present and their business operations.
BMI's Spain Renewables Report provides industry professionals and strategists, sector analysts, investors, trade associations and regulatory bodies with unique independent forecasts and competitive intelligence on the Spain renewables industry.
- Benchmark BMI's independent renewables industry forecasts for Spain to test other views - a key input for successful budgeting and planning in the renewables market.
- Target business opportunities and risks in the Spain renewables sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in the country.
BMI Industry View
Summary of BMI's key industry forecasts, views and trend analysis covering the renewables market in Spain, regulatory changes, major investments and projects and significant multinational and national company developments.
Industry SWOT Analysis
Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the renewables sector and within the broader political, economic and business environment.
BMI Industry Forecasts
Historic data series (2010-2012) and forecasts to end-2018 for electricity generation (TWh) and electricity generating capacity (MW) for each individual renewables sector present in the country.
These in turn are broken down into:
Electricity Generation: Overall capacity (TWh), growth % change year-on-year, KWh per capita, % of Total Non-Hydropower renewables generation, % of total electricity generation.
Electricity Capacity: Overall capacity (MW), growth % change year-on-year, % of non-hydroelectric renewables capacity and % of total capacity.
These forecasts are in turn supported by explicit assumptions, in conjunction with analysis of the key risks to the main forecast.
Business Environment Rankings
BMI's Renewables Business Environment Rankings provide fully comparable Risk-Reward Rankings aimed at investors in the regional renewables market.
The rankings methodology makes sophisticated use of various industry, economic and demographic data point.