Grid balancing in the Spanish market

Economic conditions in Spain are tough, and the opportunities for new wind farms in the country are pretty much non-existent. But they are providing a perfect testbed for a scheme that could help change the idea of wind as destabilising the power grid.

Here’s the history bit. In 1997, the Spanish government introduced a programme to spur growth in renewables, and it succeeded.

By 2007, Spain was the world’s third-largest nation in terms of installed wind capacity, with 15.1GW. It thought it needed this extra capacity as, by 2007, electricity demand in Spain hit 45GW.

All looked bueno. And then it didn’t. Dramatically.

One year later, the global financial crisis hit. This led to a collapse in the Spanish property market and pushed the country’s economy into a deep recession. Spain officially entered recession in 2008 before emerging in 2010 – and then slipping back into recession in 2011, until 2014. This economic turmoil means electricity demand hasn’t exceeded its 2007 level, and there is oversupply.

This has been bad for wind, of course. Spain cut subsidies in 2010, and then in 2014 it retrospectively cut payments for the operators of existing schemes. This has damaged confidence among wind companies and investors, and it is yet to recover. We will have to see who is brave enough to bid in Spain’s upcoming 3GW auction.

But this crisis has also led to creativity. It forced more Spanish firms into emerging markets. The planned acquisition by Siemens of Gamesa is testament to this trend.

And we have seen another example over the Christmas break.

Spanish utility Acciona said on 28 December that it is using wind farms with total capacity of 2GW to provide grid balancing services, as required by grid operator Red Electrica de Espana.

Grid balancing services enable the grid operator to match the supply of electricity with demand, and are conventionally provided by the fossil fuel-based sources, which are not as intermittent as wind and solar. This was the case in Spain too until early 2016.

On 10 February 2016, REE allowed renewables firms to offer these services too – and why not? Spain has a high percentage of renewables in its grid – around 40% – and its utilities are able to provide more clean energy as needed.

Acciona started by providing balancing services from 1GW of its wind farms in Spain, where it has total wind capacity of 4.7GW, and it is now looking to do so from projects of 3.5GW.

Acciona says that the efficiency of prediction software means it has a very good idea of how much power its wind projects will produce at any time, and can therefore help the Spanish grid to run effectively. It controls these wind projects from a central hub.

This approach might mean that Acciona does not run all of its wind farms at their full capacity all of the time, but it sees the benefits when it is able to sell power into the grid for higher rates at short notice when REE needs it. It makes business sense.

So why do we think this important?

For one thing, it means that renewables are sometimes providing 70% of the power required by the Spanish grid without negative impacts. This is a notable milestone as the sector constantly faces questions of how much wind is too much.

It also shows wind farms can play an important role in solving issues of grid stability, rather than cause them. Acciona is making a case that wind companies do not always need their fossil fuel counterparts in the background, ready to ride to the rescue.

There are caveats. This is only one case study and Spain is in many ways unique. It went big on renewables thanks to strident politicians, and experienced a deep crash from which it has not recovered. But it still shows how wind is a key part of the mix.

And every technological shift needs its trailblazers.

Economic conditions in Spain are tough, and the opportunities for new wind farms in the country are pretty much non-existent. But they are providing a perfect testbed for a scheme that could help change the idea of wind as destabilising the power grid.

Here’s the history bit. In 1997, the Spanish government introduced a programme to spur growth in renewables, and it succeeded.

By 2007, Spain was the world’s third-largest nation in terms of installed wind capacity, with 15.1GW. It thought it needed this extra capacity as, by 2007, electricity demand in Spain hit 45GW.

All looked bueno. And then it didn’t. Dramatically.

One year later, the global financial crisis hit. This led to a collapse in the Spanish property market and pushed the country’s economy into a deep recession. Spain officially entered recession in 2008 before emerging in 2010 – and then slipping back into recession in 2011, until 2014. This economic turmoil means electricity demand hasn’t exceeded its 2007 level, and there is oversupply.

This has been bad for wind, of course. Spain cut subsidies in 2010, and then in 2014 it retrospectively cut payments for the operators of existing schemes. This has damaged confidence among wind companies and investors, and it is yet to recover. We will have to see who is brave enough to bid in Spain’s upcoming 3GW auction.

But this crisis has also led to creativity. It forced more Spanish firms into emerging markets. The planned acquisition by Siemens of Gamesa is testament to this trend.

And we have seen another example over the Christmas break.

Spanish utility Acciona said on 28 December that it is using wind farms with total capacity of 2GW to provide grid balancing services, as required by grid operator Red Electrica de Espana.

Grid balancing services enable the grid operator to match the supply of electricity with demand, and are conventionally provided by the fossil fuel-based sources, which are not as intermittent as wind and solar. This was the case in Spain too until early 2016.

On 10 February 2016, REE allowed renewables firms to offer these services too – and why not? Spain has a high percentage of renewables in its grid – around 40% – and its utilities are able to provide more clean energy as needed.

Acciona started by providing balancing services from 1GW of its wind farms in Spain, where it has total wind capacity of 4.7GW, and it is now looking to do so from projects of 3.5GW.

Acciona says that the efficiency of prediction software means it has a very good idea of how much power its wind projects will produce at any time, and can therefore help the Spanish grid to run effectively. It controls these wind projects from a central hub.

This approach might mean that Acciona does not run all of its wind farms at their full capacity all of the time, but it sees the benefits when it is able to sell power into the grid for higher rates at short notice when REE needs it. It makes business sense.

So why do we think this important?

For one thing, it means that renewables are sometimes providing 70% of the power required by the Spanish grid without negative impacts. This is a notable milestone as the sector constantly faces questions of how much wind is too much.

It also shows wind farms can play an important role in solving issues of grid stability, rather than cause them. Acciona is making a case that wind companies do not always need their fossil fuel counterparts in the background, ready to ride to the rescue.

There are caveats. This is only one case study and Spain is in many ways unique. It went big on renewables thanks to strident politicians, and experienced a deep crash from which it has not recovered. But it still shows how wind is a key part of the mix.

And every technological shift needs its trailblazers.

Economic conditions in Spain are tough, and the opportunities for new wind farms in the country are pretty much non-existent. But they are providing a perfect testbed for a scheme that could help change the idea of wind as destabilising the power grid.

Here’s the history bit. In 1997, the Spanish government introduced a programme to spur growth in renewables, and it succeeded.

By 2007, Spain was the world’s third-largest nation in terms of installed wind capacity, with 15.1GW. It thought it needed this extra capacity as, by 2007, electricity demand in Spain hit 45GW.

All looked bueno. And then it didn’t. Dramatically.

One year later, the global financial crisis hit. This led to a collapse in the Spanish property market and pushed the country’s economy into a deep recession. Spain officially entered recession in 2008 before emerging in 2010 – and then slipping back into recession in 2011, until 2014. This economic turmoil means electricity demand hasn’t exceeded its 2007 level, and there is oversupply.

This has been bad for wind, of course. Spain cut subsidies in 2010, and then in 2014 it retrospectively cut payments for the operators of existing schemes. This has damaged confidence among wind companies and investors, and it is yet to recover. We will have to see who is brave enough to bid in Spain’s upcoming 3GW auction.

But this crisis has also led to creativity. It forced more Spanish firms into emerging markets. The planned acquisition by Siemens of Gamesa is testament to this trend.

And we have seen another example over the Christmas break.

Spanish utility Acciona said on 28 December that it is using wind farms with total capacity of 2GW to provide grid balancing services, as required by grid operator Red Electrica de Espana.

Grid balancing services enable the grid operator to match the supply of electricity with demand, and are conventionally provided by the fossil fuel-based sources, which are not as intermittent as wind and solar. This was the case in Spain too until early 2016.

On 10 February 2016, REE allowed renewables firms to offer these services too – and why not? Spain has a high percentage of renewables in its grid – around 40% – and its utilities are able to provide more clean energy as needed.

Acciona started by providing balancing services from 1GW of its wind farms in Spain, where it has total wind capacity of 4.7GW, and it is now looking to do so from projects of 3.5GW.

Acciona says that the efficiency of prediction software means it has a very good idea of how much power its wind projects will produce at any time, and can therefore help the Spanish grid to run effectively. It controls these wind projects from a central hub.

This approach might mean that Acciona does not run all of its wind farms at their full capacity all of the time, but it sees the benefits when it is able to sell power into the grid for higher rates at short notice when REE needs it. It makes business sense.

So why do we think this important?

For one thing, it means that renewables are sometimes providing 70% of the power required by the Spanish grid without negative impacts. This is a notable milestone as the sector constantly faces questions of how much wind is too much.

It also shows wind farms can play an important role in solving issues of grid stability, rather than cause them. Acciona is making a case that wind companies do not always need their fossil fuel counterparts in the background, ready to ride to the rescue.

There are caveats. This is only one case study and Spain is in many ways unique. It went big on renewables thanks to strident politicians, and experienced a deep crash from which it has not recovered. But it still shows how wind is a key part of the mix.

And every technological shift needs its trailblazers.