Energyear Madrid 2023: Key Takeaways

On the 25th and 26th of April, PVcase traveled to Madrid for one of the most important events on the Spanish renewable energy agenda: Energyear Madrid 2023. During this event, we had the opportunity to meet the large community of PVcase users in Spain and to learn and discuss the current state of renewables in the country with more than 900 participants from over 280 companies leading the energy transition in Spain.

Pains of Spain's Exponential Growth

The buzz around the growth of renewable energy, particularly solar, was palpable throughout the conference. According to BloombergNEF (BNEF), Spain was the largest solar market in Europe in 2022, growing by 55% year-over-year and installing 7.3 GW of solar. This is just slightly more than Germany and 2.7 GW more than the third-largest EU market, Poland. More than half of the capacity installed in Spain was utility-scale, but the share of rooftop solar has grown six-fold since 2018 after the Spanish government rolled back regulations that previously hindered rooftop solar. Spain's excellent climate for solar, positive economic outlook, and ambitious government support are driving things forward.

However, due to the rapid pace at which Spain has returned to the global solar market, the market faces challenges. These relate to regulatory, technical, and financial hurdles that hold it back from realizing its full solar potential.

Regulatory and Investment Uncertainty Continues

While the Spanish government is responsible for Spain’s solar resurgence—thanks to the approval in 2021 of the Climate Change Act, which set ambitious targets for renewable energy and removed the so-called sun tax—regulatory uncertainty still plagues the Spanish solar sector.

The achievement of government targets has been boosted by high electricity prices and the largest solar PPA market in Europe, with 2.5 GW of PPA-financed solar projects in Spain at the end of 2022. However, the windfall tax on renewable energy generator profits above 67€/MWh slowed down the PPA market, creating regulatory uncertainty, reducing PPA revenues, and lowering investor return expectations. Asset owners have also been affected by the introduction of a price cap on electricity generated by gas, which created a disincentive for renewable energy generation.

Adding another layer of investment uncertainty, the Spanish energy market is experiencing increasing curtailment. Curtailment occurs when there is a mismatch between supply and demand, leading to the need to reduce electricity generation from renewable sources. Panelists noted the need to hybridize PV projects with storage, lamenting the administration's slowness in establishing clear regulations and financing packages.

Ambition Comes at a Cost: EPC and Human Resource Crunch

A notable instance of regulatory uncertainty in Spain was the sudden approval of renewable projects. Permitting processes were a significant bottleneck for solar projects, taking more than three years on average to secure environmental and grid connection permits. Sometimes this took even longer, as administrative bodies are overwhelmed with requests due to chronic understaffing.

At the end of January 2023, the Spanish government approved the Environmental Impact Assessments (EIAs) of about 25 GW of solar projects, which already held grid connection rights and only needed a few more local permits before reaching "Ready To Build" status. Developers must obtain these permits and build their projects within two years, or they risk losing their permits. This has created significant tensions in the administrations that must process permits, leading to an EPC and human resource crunch.

Throughout the event, panelists stressed the difficulty in finding available EPC contractors and professionals to build all the solar projects on time. As a result, EPC companies in Spain now have long project backlogs and can choose which developers to work with, likely driving an increase in EPC contract prices. Workers from adjacent sectors, such as oil and gas, are entering solar, but they may lack the expertise to deliver quality work. The challenge of onboarding and re-skilling engineering teams is well-known but unavoidable as the sector heads towards more than 1 million solar jobs by 2030.

Thanks to PVcase Academy, which compiles the combined experience of our engineering teams, PVcase clients can ensure their staff get up to speed with the latest best practices to design and engineer utility-scale PV plants. This is complemented by the digital release of SolarPower Europe’s Lifecycle Quality Guidelines for solar projects on the Solar Best Practices Platform. This platform compiles SolarPower Europe’s EPC, O&M, Asset Management, and Lifecycle Quality Management Best Practice Guidelines and makes them available in a web-based format.

Solar’s Final Frontier: Embracing Digital Technologies

Several panels at Energyear focused on how solar is embracing digital technologies by consolidating existing technologies and introducing innovations that improve plant performance, speed up design and engineering times, or increase the efficiency of operations and maintenance tasks. Panelists discussed the state of the art in applying Artificial Intelligence (AI) and Machine Learning (ML), advances in predictive maintenance, the use of Building Information and Modelling (BIM) in ground mount solar projects, Internet of Things (IoT), and integrating on-site installation crews with digital systems.

Despite the wide variety of digital technologies discussed, data quality was identified as a common challenge. Issues such as a lack of data standardization within the solar sector, challenges in collecting reliable data from field installations, and ensuring datasets are clean and free of errors and time shifts were highlighted. Without robust and trustworthy data, the integration of digital technologies in solar is unlikely to succeed.

Digital twins could be a stepping stone toward high-quality data, and PVcase is leading discussions on how to address this. As part of the Horizon 2020-funded Trust-PV project, PVcase developed and demonstrated a framework for utility-scale solar PV digital twins based on PVcase Ground Mount and PVcase Yield inputs. By matching these with as-built documentation or aerial imagery of tangible assets, a digital twin can be generated that acts as a reliable primary source of PV assets. This single source of truth could increase transparency and facilitate data exchange about solar assets, supporting the development of robust data that enables AI and ML technologies and predictive maintenance. Furthermore, digital twins could help streamline engineering processes throughout the solar PV asset lifecycle by acting as a central information exchange node on the plants.