SUMMARY  

Spain offers good opportunities for U.S. companies that specialize in renewable-energy products. This study provides insights on Spain’s renewable energy market and attempts to identify opportunities for U.S. exporters in the following sub-sectors: small hydro-electric power, waste-to-energy and biomass, photovoltaic and thermal solar, and wind energy. It looks at Spain within a European framework, evaluating the development of renewable energy in a historical perspective, analyzes current and future projects and discusses ways to enter this market.  

MARKET OVERVIEW  

The Spanish Government encourages the use of renewable energy based on its Renewable Energy Plan (PER - Plan de Energías Renovables).The PER set specific goals for 2010.

Opportunities exist in market niches requiring technological developments. In the services area, opportunities exist in engineering services to design, build, manage and operate renewable energy networks (through agreements with Spanish utilities), and for construction and consulting firms. There are also good prospects for joint venture/licensing agreements for the local production of power generation equipment, accessories, automation instruments and parts. Most of the renewable energy equipment in Spain is developed and manufactured locally under licensing agreements. 

Since 2003 the Spanish government has actively supported the deregulation of the energy sector (two years ahead of the EU), thus allowing consumers to freely shop for electricity. The goal of the government’s national renewable energy plan is to have at least 12 % of primary energy consumption in Spain to be derived from renewable energy sources, such as wind, photovoltaic and thermal solar, waste-to-energy, mini-hydro, etc. by 2010. The PER sets specific goals for 2010:

• Wind: Improve electric infrastructure & wind energy production management
• Hydro-Electric: Promotion of public & private investment
• Solar (Thermal): Technical Building Code
• Solar (Photovoltaic): Installed surface annual increase by 700,000 m2 
• Biomass: Co-combustion projects promotion
• All areas: Promote R&D

Spain is currently the second largest producer of renewable energy in the EU15 after Germany. Spain depends heavily on foreign energy suppliers; 80% of the energy sources are imported. Due to this fact and given the good geographical and atmospheric environment, Spain has been actively supporting and promoting renewable energy production in country. 

In 2007 renewable energy production represented 7% of all energy use in Spain, a 0.5% increase from the year before. The renewable energy sector generated a total of 61,951GWh. This rise in production stems from dramatic increases in the photovoltaic, wind, and biofuels sectors as energy sources. This corresponds to just over half of the required percentage to reach the 12% renewable energy use target of the EU15 by 2010 and Spain’ s objective under the PER. It also indicates that an annual increase of 1.3% in renewable energy is needed to achieve this goal. Spain’s energy needs are met by oil (48%), natural gas (21.6%), coal (13.7% ), nuclear (9.7%) and renewable (7%). In addition to the Renewable Energy Plan 2005-2010, Spain’s long-term objective is to produce at least 20% of the total energy needed from renewable sources by 2020. To reach this objective, an increase of at least 4% in renewable energy production is needed to cover the electricity, heating and refrigeration and transport sector energy demand. Of the total electricity produced in 2007, 19.8% was from renewable sources, surpassing nuclear electricity production which was 17.7%. 

Of the total electricity installed capacity in 2007, Spain generated 34,794 MW from renewable sources: of which 18,373MW was from hydraulic (including hydraulic plants of more than 50MW); 785 MW from biomass, biogas and solid urban waste; 15,145 MW from wind; and slightly more than 500 MW from photovoltaic. 

WIND ENERGY  

The Spanish Renewable Energy Plan sets a target of 20,155 MW of primary energy demand to be covered from wind energy by 2010. In 2007, Spain reached 15,145MW installed capacity for electricity generation, and 9,653 MW were generated that year from wind energy. By comparison, Germany generated 17,743 MW, with an installed capacity of 22,247 MW. The U.S. reached a total installed capacity of 16,970 MW in 2007 from this renewable source. 

The European wind industry is the world leader in this technology and has a world market share of 90%. Installed capacity of wind energy in Spain has grown steadily, with good prospects in years to come. In 2007, installed capacity increased by 3,374 MW, a 29% increase for that year and following a 16% increase in 2006. Spain aims to double its installed wind capacity by the year 2012. This growth has put Spain in the lead worldwide, in terms of annual MW wind energy production, with a 25.3% of the world market share. Total investment in wind energy in Spain is over 5 billion Euros. 

SOLAR ENERGY  

From 2002 to present, Spain has been second, behind Germany, in producing photovoltaic energy in Europe. Photovoltaic solar energy continues to be a growing sector in Spain (54% annually), driven by the assistance programs of IDAE (Instituto para la Diversificación y Ahorro de Energía - Energy Diversification and Saving Institute). The main autonomous communities to contribute with photovoltaic energy are Navarra and Catalonia. 

More recently, IDAE has created programs to promote the development of additional plants and other means to utilize this type of energy in Spain. Currently, IDAE has a budget of 12 million euros, solely to promote the construction of new photovoltaic energy plants. In 2006, 169 GWh were generated for electricity use. In 2007, new capacity grew 341MW. 

The Spanish Government has just approved a new Royal Decree enabling Spain to reach 3,000MW of installed photovoltaic capacity by 2010. With the approval of the Building Technical Code in 2006, solar thermal will also be promoted. This Code forces all new buildings and the ones to be renovated to cover between 30 and 70% of the homes hot water demand from solar thermal. This percentage is dependant upon the estimated hot water demand and geographical location of the buildings. 

HYDRO-ELECTRIC  

According to the objectives of the 2002 Plan de Fomento (Development Plan), energy from mini-hydro (less than 50MW) sources needs to grow at a steady pace over the next few years to reach 2,230 MW goal by 2010. In order to reach this number, the annual installed power would almost need to double the current annual installed capacity. In order to speed up installation and meet the objectives of the plan, administrative barriers and long processes to gain concessions will need to be amended or removed. An increase of 1.7% in the hydroelectric sector in 2007 was a driving force in increasing the overall share renewable energies held in energy consumption. Spain saw a growth of new mini hydropower installations of 31MW, reaching 16% of its 2006 annual goal and 2007 saw an even higher capacity level of 59MW.

BIOMASS  

Fifty-five new MW were created in 2006 and this figure is expected to grow dramatically in the coming years. Biomass energy technologies generated 2,454GWh during 2006, reaching 4% of the 2010 goal. Spain is still far from achieving its goal of 1,695 MW of potential, out of which 973MW would be for electricity production and 722MW for combined combustion. 

BIOFUELS  

At present, 35 million m3 meter of biofuel (bioethanol and biodiesel, mainly) are produced in the EU. The EU Directive 2003/30 sets the objective of covering 5.75% market share of the transportation sector with biofuels and other renewable fuels in Europe by 2010. Spain’s PER sets the objective of reaching 5.93% of fuel for transport from biofuel. Spain produced 445,577 TOE of biofuel in 2006 (72% bioethanol, 321,000 TOE; 28% biodiesel, 124,577 TOE). There are 16 biofuel production plants in Spain (12 for biodiesel and 4 for bioethanol).

MARKET ACCESS AND OPPORTUNITIES  

There are no barriers for U.S. products and services in Spain. The liberalization of Spain’s energy sector has created a good market for U.S. companies. Opportunities exist in market niches requiring technological developments. In the services area, opportunities exist in engineering services to design, build, manage and operate renewable energy networks (through agreements with Spanish utilities), and for construction and consulting firms. There are also good prospects for joint venture/licensing agreements for the local production of power generation equipment, accessories, automation instruments and parts. Most of the renewable energy equipment in Spain is developed and manufactured locally under licensing agreements. 

Electric utilities are the main promoters of renewable energy projects in Spain, since they possess the resources and technology to develop them. Federal, regional and local governments are also very active in renewable energy development, and offer incentives to attract investment.

Since there is a large variety of renewable energy equipment, import duties from the U.S. cannot be determined unless the specific kind of equipment is known. Duties apply for most energy equipment; duties should be checked on a case-by-case basis. Additional detailed information on Customs duties may be obtained at http://www.taric.es/.

In general, foreign products are imported by irrevocable letter of credit. When a relationship is established between exporter and importer/distributor, other forms of payment can be negotiated.

Contract Agreement: In general a representation/distribution agreement is governed by the conditions agreed upon between the parties. Spain applies the “freedom of contract theory” by which the contracting parties may establish any stipulation, condition or undertaking provided that it does not violate Spanish law, morals or public policy. Additional information on marketing U. S. products and services in Spain is contained in the “Country Commercial Guide” for Spain, which is available through U.S. Export Assistance Centers and at the website http://www.export.gov/

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Excerpts from Renewable Energy in Spain 2008 U.S. Commercial Service