Spain Weighs Financial Aid to Struggling Solar Power Industry
(Bloomberg) -- The Spanish government is weighing whether to offer financial support to a domestic solar industry that’s grappling with oversupply and negative wholesale power prices.
The government has started reviewing the state of the industry after being approached by private sector groups, but has yet to decide whether it will act or not, a person with direct knowledge of the deliberations said, asking not be named because the information isn’t public. The government is of the view that demand is likely to rise in the mid-term and bolster the industry, the person said.
No decision has been made and the government could decide not to offer any support to solar energy producers.
Spain’s solar industry has come under stress since last year, after prices plummeted due to overcapacity. While many solar power producers have supply contracts that ensure fixed prices, many smaller companies are vulnerable to spot market volatility.
Fostering clean-energy has been a central policy of Prime Minister Pedro Sánchez’s government since he took office in 2018, with the strong expansion of solar energy leaving Spain better positioned to whether energy crunches than other European nations.
But with an abundance of solar farms and sunlight, Spain has already beaten its annual record for hours of negative electricity prices. While the build-out of solar has helped reduce fossil-fuel use and lower wholesale power costs, investment in grids and storage has lagged behind. That is leaving growing volumes of clean electricity with nowhere to go, forcing some generators to sell power at a loss or switch off altogether.
Over-reliance on solar was a central issue behind Spain’s nationwide blackout in April of last year. Since then, the grid operator has become more cautious in managing the system’s stability with the increased use of gas-fired generation that’s less susceptible to voltage swings.
A government spokesman didn’t immediately respond to a call and a text message seeking comment.
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