Curtailment in Spain: A threat to Solar and Wind Energy Projects?

Watch te recorded webinar here

The Alter5 Webinar Curtailment in Spain: A threat to Solar and Wind Energy Projects? hosted Aurora Energy Research experts Ana Barillas, Head of Iberia & Latam and Alexandre Danthine, Research Lead, France & Iberia from Aurora Energy Research. The key takeaways from the webinar were:

1. Curtailment Types Explained: The webinar distinguished between economic and grid curtailment. Economic curtailment occurs when electricity generation from a power plant is reduced or restricted for economic reasons, such as when market prices are below a generator’s variable costs. Grid curtailment, the main focus of the webinar, happens due to local grid constraints, preventing further energy injection into the local grid.

2. Growing Importance of Curtailment: The speakers emphasized the increasing relevance of curtailment, driven by the growing presence of solar PV in the Spanish energy mix and concerns about potential oversupply and cannibalization in the sector.

3. Local Impact and Compensation: Curtailment significantly impacts local regions differently, and compensation for curtailment depends on market rules. In Spain, compensation varies based on when curtailment occurs. The speakers noted that grid curtailment is not typically included in base case revenue projections by market advisors, making it a challenging factor for investors and developers to consider.

4. Geographical Distribution of Curtailment: The webinar presented data showing the geographical distribution of curtailment in Spain, highlighting regions with higher levels of curtailment. Understanding the local dynamics and grid constraints is crucial for investors and developers.

5. Forecasting Curtailment and Risk Mitigation: There was a discussion on the possibility of forecasting curtailment by analyzing supply and demand dynamics at a provincial level and the grid’s capacity. The speakers also touched on the potential mitigating role of technologies like batteries and the importance of locational considerations in mitigating grid curtailment.

6. Impact of Emerging Trends on Curtailment: The discussion covered how emerging trends like the rise of electric vehicles, hydrogen production, and self-consumption could impact the dynamics of curtailment, potentially alleviating some of the pressures on the grid.

7. Regulatory Framework and Uncertainty: The webinar highlighted the need for a clear regulatory framework to facilitate the development of technologies like batteries, which can play a significant role in managing grid stability and mitigating curtailment risks.

8. PPAs and Curtailment Risk: There was a discussion on how the risk of curtailment is being handled in Power Purchase Agreements (PPAs), with the structure of the PPA playing a key role in determining who bears the curtailment risk.

The webinar provided a comprehensive overview of the challenges and considerations related to curtailment in the renewable energy sector, with a specific focus on the Spanish market. It highlighted the importance of understanding local grid dynamics, regulatory frameworks, and emerging trends in managing and mitigating curtailment risks.

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