Artículo dentro del especial:
con la colaboración de:

Renewables, Spain's Economic Miracle

Pedro Fresco

7 mins - 17 de Abril de 2023, 11:31

It is safe to say that the past two and a half years have changed the world. The pandemic confirmed, for the second time in a generation, that the state is indispensable in solving major crises and, in addition, awakened a new awareness of the risks of having offshored production chains. The subsequent geopolitical conflict with Russia and the associated energy crisis have had an impact on the need for independent production, in this case energy independence. History is a discipline that can only be studied from the future, but we can say with some certainty that the world of globalisation is probably over, and the neoliberal principles that the West adopted in this earlier period do not seem likely to survive without it.

Nobody really knows what comes next, but we do know that times of change are times of risk, as well as of opportunity. The current European energy situation is not at all easy, but we must examine the opportunities that are opening up right before our eyes. Spain should know how to read them better than anyone else, because history has granted us for the first time in many decades (I would say in centuries) to be in the right place at the right time.

[Recibe los análisis de más actualidad en tu correo electrónico o en tu teléfono a través de nuestro canal de Telegram]

Europe is once again relocating part of the production it had outsourced to other continents. This is a process that has been going on for a long time, rooted in the desire not to lose technologies with high added value and a strategic component such as lithium batteries, but which, after the disruptions experienced, has spread to a multitude of sectors, from microchips to solar panels. This is undoubtedly a change in trend compared to the outsourcing processes of the last 40 years.

In this context, Spain emerges as a particularly attractive destination for these industries due to two fundamental characteristics. In the short term, because unlike most of our European partners, we do not have compromised security of supply here. The Iberian regasification system means that we are not dependent on a single supplier and we are shielded from energy blackmail such as that of Russia. Furthermore, we have a gas connection with Algeria that in principle is not at risk, but even if it were, the regasification plants could meet the entire Iberian demand for gas. This energy security is key for industry, as essential industrial activity will not be cut off here due to a winter cold snap.

But more important than this short-term issue is another structural issue, that is the enormous renewable potential of the Iberian Peninsula. It is not natural gas that will be the energy of the industries of the future, but electricity and renewable gases, and in Spain we have the capacity to produce them more cheaply than our partners. Spain's solar potential is the largest in Europe and here companies can enter into PPAs (Power Purchase Agreements between a renewable plant and a final consumer) at prices more than 20 €/MWh lower than in countries such as Germany. This difference can mean millions of euros per year in savings for electricity-intensive industries compared to conducting this same industrial activity in Germany. The same would be true for an industrial self-consumption plant, which also generates a competitive advantage for the southern half of Spain, which is less industrialised than the northern half.

With onshore wind power it is similar. Wind PPA prices in Spain are also generally cheaper than in almost all European countries, perhaps with the exception of Scandinavia, whose solar potential is very small. In the end, it is on the Iberian peninsula that the best prices for renewable electricity and thus a competitive electricity price in the future can be achieved, and by that I mean in a couple of years. This is indicated by the electricity futures markets, which in the period 2025-2029 offer prices below 63,5 €/MWh for the Iberian market, while they point to 109 €/MWh in Germany and 107 €/MWh in France

And if electricity is cheap, green hydrogen, a new industry that is now emerging to decarbonise industrial processes, will also be cost-effective, as its primary source is precisely renewable electricity. If there is a country that can produce green hydrogen in an economically viable way, it is Spain, and it will therefore be able to lead this industry at European level. 

Various current projections tell us that Spain could have more than 70 GW of solar energy and 50 GW of wind energy installed by 2030. This could generate more than 80% of the electricity that Spain consumes today, although our electricity consumption will also increase, in part, to displace fossil energy consumption. Thanks to our mountainous orography, we will be able to install hydroelectric pumping stations to store this energy in large quantities, and batteries, which are already beginning to proliferate in some homes, will become widespread. Furthermore, we have a long way to go to produce biogas, an industry that is not very well developed in Spain despite the fact that we have the resources thanks to our large agri-food and livestock production. 

Our potential is enormous, but things do not happen by inertia. In order to aspire to be the region in Europe that benefits most from the new relocation process, we must not waste a minute in making renewable development Spain's top priority, and we must do so with a clear desire to reindustrialise. It is during this decade that we have the potential to achieve this, because if we let this opportunity slip away during the next decade, with European energy security re-established and with the enormous offshore wind potential in the north developed, our competitive advantage could vanish. 

This reindustrialisation process, in turn, should help us to change our economic base and also the current distribution of income. With cheaper energy than our bloc partners, there would no longer be any excuse to resort to wage devaluation as an argument for competitiveness. Our competitiveness should be our sun and wind, not our low wages. In fact, we should be aiming for an economic structure where wages receive a higher share of profits, which is more typical of industrial economies. 

Despite the situation, the huge energy problem for industries and households, and the uncertainty of the war in the East and its consequences, we must not lose perspective as a country. Short-term measures are necessary and will allow us to hold on, but it is in these difficult times that we must take the most courageous gambles. The very need to boost our energy autonomy is pushing us in the same direction, so let us do so with the utmost intensity in order to take advantage of this window of opportunity that history has brought us. Manuel Azaña used to say that the events of the last 200 years have always caught Spaniards unprepared. Not this time, this time we know the way, and we have everything we need to be on the bandwagon of the pioneering countries. Let us not waste it.
Se puede leer el artículo original en español

¿Qué te ha parecido el artículo?