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Analysing the economic impact of the new renewable electricity support scheme on solar PV plants in Spain

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  • Mir-Artigues, Pere
  • Cerdá, Emilio
  • del Río, Pablo

Abstract

A complex regulatory package implementing a new support scheme for renewable electricity was adopted in Spain in 2013 as a response to escalating support costs, which have mostly been related to solar PV promotion. A lot has been written about the retroactivity of the new Spanish regulation and its negative impact on investors’ confidence and future deployment. The aim of this paper is to analyze the implications of this regulation on the profitability of those plants in Spain. Using real data from a very common PV plant, the results show that the new support scheme has a considerable impact on the cash-flows of those plants. However, our simulations also show that the degree of reduction in the internal rates of return critically depends on different factors. Under some restrictive assumptions, the savings in support costs due to the new regulation are only around 7.6% if remuneration for investment is maintained after 2019, and around 57% if such support is removed after 2019.

Suggested Citation

  • Mir-Artigues, Pere & Cerdá, Emilio & del Río, Pablo, 2018. "Analysing the economic impact of the new renewable electricity support scheme on solar PV plants in Spain," Energy Policy, Elsevier, vol. 114(C), pages 323-331.
    • Handle: RePEc:eee:enepol:v:114:y:2018:i:c:p:323-331
    DOI: 10.1016/j.enpol.2017.11.048
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    3. Muñoz-Cerón, E. & Lomas, J.C. & Aguilera, J. & de la Casa, J., 2018. "Influence of Operation and Maintenance expenditures in the feasibility of photovoltaic projects: The case of a tracking pv plant in Spain," Energy Policy, Elsevier, vol. 121(C), pages 506-518.
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    5. Fernández-González, Raquel & Puime-Guillén, Félix & Panait, Mirela, 2022. "Multilevel governance, PV solar energy, and entrepreneurship: the generation of green hydrogen as a fuel of renewable origin," Utilities Policy, Elsevier, vol. 79(C).
    6. Patricia Blanco-Díez & Montserrat Díez-Mediavilla & Cristina Alonso-Tristán, 2020. "Review of the Legislative Framework for the Remuneration of Photovoltaic Production in Spain: A Case Study," Sustainability, MDPI, vol. 12(3), pages 1-16, February.
    7. Raquel Fernández-González & Andrés Suárez-García & Miguel Ángel Álvarez Feijoo & Elena Arce & Montserrat Díez-Mediavilla, 2020. "Spanish Photovoltaic Solar Energy: Institutional Change, Financial Effects, and the Business Sector," Sustainability, MDPI, vol. 12(5), pages 1-18, March.
    8. Jan K. Kazak & Joanna A. Kamińska & Rafał Madej & Marta Bochenkiewicz, 2020. "Where Renewable Energy Sources Funds are Invested? Spatial Analysis of Energy Production Potential and Public Support," Energies, MDPI, vol. 13(21), pages 1-26, October.
    9. López Prol, Javier & Steininger, Karl W., 2020. "Photovoltaic self-consumption is now profitable in Spain: Effects of the new regulation on prosumers’ internal rate of return," Energy Policy, Elsevier, vol. 146(C).
    10. Castro-Rodríguez, Fidel & Miles-Touya, Daniel, 2023. "Impact of Spanish renewable support scheme reforms on the revenues of photovoltaic power plants," Utilities Policy, Elsevier, vol. 80(C).
    11. Mahmoud Dhimish, 2020. "Performance Ratio and Degradation Rate Analysis of 10-Year Field Exposed Residential Photovoltaic Installations in the UK and Ireland," Clean Technol., MDPI, vol. 2(2), pages 1-14, May.
    12. Espinoza, R. & Muñoz-Cerón, E. & Aguilera, J. & de la Casa, J., 2019. "Feasibility evaluation of residential photovoltaic self-consumption projects in Peru," Renewable Energy, Elsevier, vol. 136(C), pages 414-427.
    13. Bonnin Roca, Jaime & O'Sullivan, Eoin, 2022. "The role of regulators in mitigating uncertainty within the Valley of Death," Technovation, Elsevier, vol. 109(C).

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