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Transitional Power Sources

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Pedro Moraleda analyses energy sources for the changeover

In the first half of 2018, we will see the specifications of the committee of experts in the analysis of scenarios for the energy changeover, which was created by the agreement of the Council of Ministers last July.

In the face of such an initiative, which could set a political roadmap and predetermine the future energy matrix, there is a proliferation of interventions by representatives of different sub-sectors in defence of the leading role of their energy sources, but sometimes with statements so biased that they prompt a concise reflection on the subject.

Our energy matrix will essentially be determined by our possibilities and by the objectives that lead us or that we set ourselves.

As for possibilities, Spain produces hardly any hydrocarbons and the amount of annual imports represents around 4% of the Gross Domestic Product (GDP), although it is quite variable, depending on the international oil price. This amount weighs on our trade balance and is not acceptable, not only for economic reasons, but also for security of supply.

Nature, however, compensates for the deficiency of our subsoil by providing us with more wind and certainly more hours of sunshine than most European countries.

The progress of wind power generation seems to have no other limit than the availability of suitable locations, the use of solar energy using photovoltaic panels has been the most spectacular advance in the energy sector in the last ten years. In 2007 Royal Decree 661 photovoltaic generation was encouraged, with a premium of more than 400 euros per megawatt hour, in the most recent international auctions the megawatt is being offered for around 20 euros in long-term contracts for large photovoltaic plants and in places with hours of sunshine.

But, as the ideal scenario does not exist, there is a strong need for lots of generating sources, to keep the lights on when the sun goes down or the wind doesn't blow; that is, nuclear power, gas or coal. And this is where the second condition comes into play: the objectives and their compatibility.

We need to reduce our external energy dependency, while meeting Europe's commitment to reach 20 percent renewables in final energy demand by 2020, but it is not clear that these targets can be met and secure constant electricity supply when already half of our generation capacity is dependent on rain, wind or sunshine. It will be even more difficult in 2030, if the target for renewables is set at 30 per cent or more, as is being discussed.

The year 2020 is around the corner and, to go from the current 17 percent to the 20 percent target, the government has given a new impulse to renewables, with important auctions in 2016 and 2017. But more renewables imply greater capacity to back up traditional generation plants, whose viability is in question.

Coal is in question because its use is incompatible with the objectives of reducing emissions as long as there are no efficient technologies for capturing CO2, so that the options for secure power generation are currently limited to gas and nuclear power.

We have cycles combined with gas with the capacity to generate more than half of the electricity we consume, although in years with normal climate they are largely idle and contribute only just over 10 percent to the total energy generation.

The operational flexibility of these plants is currently unbeatable, but the problem for their increased long-term use is that gas is not free of greenhouse gas emissions and does not help reduce our energy dependency.

Nuclear power plants contribute 21 percent of electricity generation, operate almost without interruption, the cost of generating current plants is very competitive and hardly penalises our trade balance; they do not emit harmful gases, but they generate waste that lasts for centuries and risks accidents, which, although very sporadic, have serious consequences.

We could conclude that combined cycles and nuclear power plants are not only necessary partners for the transition to an emission-free energy model, but it would be suicidal to do without any of them at this time.

As the future model involves a greater demand for energy, starting with the transport sector, any reduction in nuclear input would imply a greater use of gas which, although less polluting than coal, presents the aforementioned drawbacks.

But, the real challenge to move forward quicker is to find the formula for an orderly transition from the traditional centralized generation model to a new one of disseminated generation, with self-supply and energy accumulation, more high-efficiency cogeneration, trigeneration, and so on. In short, to overcome the technical constraints to safely manage a high percentage of renewable energies and the proliferation of wind generators.

This challenge requires legislative, technical and economic boosts, which are analysed by the changeover committee of experts.

 

For further information, please contact:

Pedro Moraleda García de los Huertos

pedro.moraleda@AndersenTaxLegal.es

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