A healthy energy market has space for competition, and prices that are fair to consumers. The rush for renewable energy and storage leads to regulators easing entry controls to some grids. An over-supply in Spain caused BBC News to ask if it’s possible to have “too much of good thing”. This could destabilize storage battery markets, and so we investigate.
What Caused the Rush For Renewable Energy in Spain?
Wind power is ahead of solar power in Spain by a factor of four. The Hispanic nation doubled its wind generation since 2008, during which time solar increased eight times.
The process that lead to Spain becoming the second largest energy renewer in Europe after Sweden, began when the Socialist Party formed a government in 2018. The new administration removed regulatory obstacles and introduced subsidies.
A storage battery boom followed, despite the dampening effect of the Covid outbreak. Many Spanish residents chose the independence of rooftop solar over money in the bank.
As Covid subsided, the Spanish government set the ambitious target of 81% renewables by 2030. However, its best intentions have lead to an imbalance between supply and demand, even a surplus of electricity at times.
Spanish Electricity Consumption Declining Since Covid
Although the Spanish economy recovered strongly after the pandemic, electricity consumption has been declining. Indeed, in 2023 it was the lowest since 2003. Demand once grew faster than Gross Domestic Product (GDP) but that has changed.
“What we’re seeing is a decoupling of energy intensity from the economy” observes a spokesperson for Spain’s national grid. There are several reasons for this according to BBC News:
- The Ukraine war and the natural gas shortage that followed lead to homes and businesses cutting energy consumption.
- Greater energy efficiency became a hot topic. Meanwhile, some consumers began producing their own electricity.
The demand / supply gap is wider when daylight solar production is high. “That has driven prices down, especially during certain hours, when the prices have been zero or even negative,” according to the grid spokesperson.
This presents new challenges for suppliers entering the market, and also for battery manufacturers. Perhaps the answer lies in engaging consumers and business on the demand-side, and seeking a solution that’s best for all parties.
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