Spain released in July 2023 the latest draft of its National Economic and Climate Plan (NECP). According to the outlook, greater renewable energy ambitions put the country on track to meet its 2030 targets, provided there is continued revenue support. The accelerating fall in electricity prices will see energy profits from renewable energy projects fall below the level required for new investment by 2025.
In the new draft policy NECP’23, Spain aims to build 85GW of installed PV and wind capacity between 2023-2030, double the previous policy target NECP’20. According to an analysis by Bloomberg New Energy Finance, this would push the share of renewables in power generation up to 80% by 2030, compared to 68% under the old NECP.
In the NECP’23 scenario, the increase in new renewable energy installations results in electricity prices averaging €52/MWh over the 2023-2030 period, which is 31% lower than the level in the NECP’20 scenario.
The rapid expansion of PV installations leads to an increase in light abandonment in the NECP’23 scenario and causes annual profits to fall to €44/kW by 2026, 20% below the level required for new investments. In contrast, PV profits in the old NECP scenario are still higher than the level required for new projects during the Bloomberg New Energy Finance outlook.
By 2025, onshore wind energy profits have fallen below the level required for new build projects, three years earlier than in the NECP’20 scenario.
The NECP’23 scenario sees renewable energy installations continue to be built, displacing gas-fired generation and lowering the utilization hours of combined cycle gas turbine (CCGT) plants, and by 2025, CCGT plant revenues are struggling to cover fixed costs.