Gemasolar at 2: beauty in a beast of a market
After two years of operation, Spain’s Gemasolar plant is rightly considered a shining pinnacle of the renewable energy revolution. The same cannot be said of Spain’s market.
If power plants were rock stars then Gemasolar would be something akin to Miley Cyrus right now.
Since entering operation more than two years ago, the iconic CSP plant has been chosen as the backdrop for lush advertising campaigns such as the promotional video launching Mercedes-Benz’s new Sprinter van in September.
And this month operator Torresol Energy, a joint venture between CSP developer Sener and Masdar of Abu Dhabi, confirmed the facility would serve as one of the settings in Gran Turismo 6, the latest edition of the 70 million-selling PlayStation game from Sony.
“Creator Kazunori Yamauchi personally chose Gemasolar to vivify this new version due to the spectacular scenery of the facility,” said Sener in a press release.
And Gemasolar, which made industry history by being the first plant to incorporate round-the-clock storage, has not just wowed advertisers and video game designers. In 2011 it won Sener the final prize in the innovation category of the European Business Awards.
Last September it also bagged an award of merit from the International Federation of Consulting Engineers for being one of just a dozen projects deemed to represent the best engineering works of the last century.
Event co-organiser Tecniberia said Gemasolar was "currently one of the best examples of Spanish engineering anywhere in the world."
The 19.9MW plant’s developers are justly proud of its achievements, which include a 24-hour output for a record 36 consecutive days during the summer of 2013.
“Gemasolar has been a pioneering project, a first of a kind, which has demonstrated the robustness of tower technology with commercial-scale high-temperature storage designed and developed by Sener,” says a source at Sener.
“It has represented a landmark in the global solar thermal industry and in the field of renewable energy.”
A Torresol insider adds: “It remains a model worldwide for those interested in the CSP sector. No other company has managed to build a plant with these characteristics, although many are trying.”
But if Gemasolar is a model for the world to admire, the same cannot be said for the market that spawned it.
Far from building up a renewable industry to be proud of, since the Torresol plant went live the Spanish administration has pursued a vigorous campaign to dismantle any aspirations the country might have for clean energy leadership.
Nobody doubts that Spain’s energy system, as it was two years ago, needed changing.
When the right-wing People’s Party (Partido Popular in Spanish) took the reigns with a landslide electoral victory in 2011, one of the most pressing issues it faced was what to do with a gargantuan debt called the tariff deficit.
This is the difference between the costs and revenues of regulated activities in the electrical system, which included the financing of feed-in tariffs (FiTs) for CSP and other types of renewable generation.
Degree of hostility
Most renewable power developers and operators expected to see cuts as a result of this situation. However, the degree of hostility shown to the sector has raised concerns that Spain’s Ministry of Industry, Energy and Tourism is effectively in thrall to the country’s big five utilities.
Outwardly the big five are keen to push their green credentials, but within the energy industry they are known to be hostile to renewables because these impact on their ability to make a return on investments in combined cycle gas turbine plants built in Spain’s boom years.
After calling a halt on all new renewable energy projects upon coming into office, in July 2013 José Manuel Soria López, Minister for Industry, Energy and Tourism, proposed an energy reform that contained copy-and-paste references to a previous proposal from utility Iberdrola.
The law does away with FiTs altogether and replaces them with a ‘reasonable return’ of 7.5%. Nearly half a year on, however, there is still no word on how this reasonable return will be calculated.
Worse still, with mere weeks to run before the bill was due to enter into effect, Soria’s counterpart in Finance and Public Administration, Cristóbal Montoro Romero, booted out a previously agreed €2.2 billion credit towards the tariff deficit.
The move, which leaves Soria trying to find the cash elsewhere, was the latest in an almost farcical series of policy miss-steps which has left local and foreign renewable energy investors smarting. Far from investing in Gemasolar’s home market, backers are running scared.
In November, for example, Termosolar Alcázar, a joint venture between Preneal of Spain and SolarReserve of the US, confirmed it was shuttering plans for a 50MW, €500 million CSP plant in Alcázar de San Juan, Castile-La Mancha.
“These restructuring measures really kill off financing,” observes Ed Cahill, an associate at Lux Research in Boston, USA. “If your restructuring involves a cut to the incentives investors cannot make a proper financial analysis of the returns. It is a ton of risk.”
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