Spanish Government officials project that companies will spend Euros 6.5 billion (USD 8.5 billion) between 2002-2012 to meet the country’s growing energy demand. National electric energy demand grew by 1 percent in 2008. According to Renewable Energy Plan (2005-2010), 12 percent of energy consumed will be renewable energy by 2010. This plan projects a GOS investment of almost Euros 23 billion (more than USD 31 million) in renewable energy in Spain to reduce energy dependence and increase the safety of supply.
The government also approved the 2005-2007 Action Plan for the Spanish Strategy of Energy Saving and Efficiency Program (2004-2012). This program rationalizes energy consumption and complements the effort being put into renewable energy technologies. It will produce a cumulative reduction of primary energy of 12,004 tons of oil equivalent (toe), equivalent to 8.4 percent of total Spanish energy consumption and of 20 percent of oil imports. In 2008, the renewable energy installed capacity grew 5 percent from previous year with wind energy being the main source of this increase. Wind energy covered 11 percent of the electricity demand in 2008.
Average energy demand in Spain is projected to increase approximately 3.7 percent per year until 2011. The Spanish Government estimates that by the year 2010, renewable sources will account for 29 percent of total power generated. Natural gas will account for 33 percent. In 2008, electricity generated from natural gas, mainly from combined cycle plants, accounted for 32.8 percent of the total electricity generation. The Ministry of Industry anticipates more than 50 percent growth in renewable energy consumption from 2000 to 2011.
Spain has very limited domestic energy resources. Eighty percent of energy consumption must be met from imported sources. Spain imports approximately 64 percent of the coal, 99.5 percent of the oil and 99.1 percent of the gas it uses. Oil accounts for 50 percent of primary energy consumption. Energy imports account for 10 percent of total imports to Spain.
As the market becomes increasingly competitive, joint ventures and partnerships will play an important role in capturing market share, injecting necessary capital and technology to ensure continued dynamic growth in the sector.
Liberalization of the power-generation market began with Law 54/1997, which implemented European Commission Directive 92/96 for the internal electric market and initiated deregulation of Spain’s power-generation and distribution market. This new law established the freedom to build power generation facilities, created a competitive electricity market, and set a gradual time frame for liberalization, which began January 1, 1998. The deregulation process, completed on January 1, 2003, brought major changes to the electricity sector and permitted every consumer to buy electricity freely on the open market.
The challenge Spanish regulators face is balancing the country's energy needs while keeping Spain's carbon-emissions commitments under the Kyoto Protocol. The solution for keeping the lights on in the fifth-largest electricity market in the EU is born of necessity and is immensely practical: build natural-gas-burning, high-efficiency, combined-cycle plants and significantly increase Spain's wind-power portfolio.
Spain's 16,740 MW installed wind-power capacity makes it the third-largest wind-energy producer in the world, after Germany (20,622 MW) and the U.S. in 2008. Spain’s heavy investment in wind technology allowed a 15.4 percent increase of wind energy generation to produce electricity, covering 11 percent of Spain's total electricity demand in 2008. Spain leads the EU in growth of natural gas consumption and that growth is projected to continue at a rate of about 10 percent a year through 2011. Natural gas demand grew 9.9 percent in 2008.
Spain has 94,966 MW installed capacity. The sector is attracting a substantial amount of investment to modernize old plants and move to a new way of doing business. This investment should present opportunities for U.S. companies offering state-of-the-art equipment and services.
Wind energy is the main renewable source reaching 17 percent of total installed capacity in 2008. The renewable-energy sector in Spain offers growth opportunities in solar energy and bio-fuels.
Opportunities exist in the solar-energy market. The new legal framework being developed in Spain encourages the use of devices in buildings and houses that guarantee minimum coverage of power demand by solar energy. This solar energy will reduce pollution and diminish drastically dependence on fossil fuels. The Spanish government estimates that the solar plants will reach 3,000 MW of generation capacity by 2010 and 10,000 MW by 2020. The solar resource is abundant in Spain as compared to other countries.
Electric utilities are the main promoters of renewable-energy projects in Spain, since they possess the resources and technology necessary to develop them. Federal, regional and local governments are also very active in renewable energy development and offer incentives to attract investment, which they consider beneficial in economic, political, social and environmental terms.
The challenge of the plans above is to make the renewable-energy sector attractive to private investors, to maintain the interest that has already been created in some sectors, and to expand it to other areas in the energy industry.
Business opportunities exist for U.S. firms in the Spanish energy market and strategic alliances with Spanish companies can give U.S. companies access to the Latin American market as well. U.S. small and medium- sized companies, particularly equipment and service providers, should know that doing business with Spanish energy companies can open up opportunities in other sectors, such as environmental technology, that are closely linked with energy.