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Canadian pension affiliate grabs 3.4 GW share of Spanish PV boom

08 April 2021 Cristina Brooks

International interest in Spain's solar photovoltaic (PV) market is accelerating, with 3.4 GW of solar projects set to be backed by the investment manager of Canada's public pension scheme.

Spanish PV developer Benbros Solar has agreed a development joint venture with UK-based investment platform Renewable Power Capital, which was established by Canada's Pension Plan Investment Board (CPP Investments) in 2020 to invest in renewables in Europe. So far, it has invested in onshore wind in Finland.

The partners will develop or acquire 14 projects in the Spanish regions of Andalucía, Extremadura, Castilla la Mancha, Aragon, and Murcia, according to a 29 March statement.

CPP Investments' said it is strategically partnering with the local developer to enter the market, adding that the availability and strength of the country's solar resources permits investors to profit from the lowest PV levelized cost of energy in Europe.

Canada's pension board does not invest in just renewables. It plans on merging its more conventional and renewable investment groups into an $18-billion Sustainable Energy Group (SEG), which will hold all its upstream, midstream, research, and renewable assets, according an 6 April statement.

By merging its assets, the pension board plans to have better access to attractive investments, financing not just new power capacity, but also "low carbon energy alternatives."

EU recovery powers PV buildout

Recently, Spain has seen a hike in foreign PV investment, with players like French energy company Total and Anglo-Dutch oil giant Shell planning to develop large projects.

The trend of established energy companies investing in solar prevails in Europe. "Large energy majors control half of the 30-GW PV project pipeline that is owned by the 30 largest developers in Europe," said Research and Analysis Manager Josefin Berg in the introduction to IHS Markit's recent data presentation on future European PV markets. Europe has installed about 176 GW of PV in total, a number that could more than double by 2024, she said.

Spanish PV markets also enticed a BP company, Lightsource bp, to acquire a portfolio and participate in a government PV auction, highlighting the attraction of the country's strong sunlight and easy permitting.

EU legislation appears set to drive future PV tenders in Europe because the EU is requiring member states to carry out green investments to access their share of €750 billion ($892 billion) in pandemic recovery funds.

Member states must submit tailored recovery plans that align with the EU's proposed 2050 goal of a 55% emissions reduction goal by 30 April.

As part of those plans, the countries' individual National Energy and Climate Plans (NECPs) set out pledges to invest in PV, among other things. Should the projects proposed in the NECPs submitted so far come to fruition, about 200 GW of PV would be built by 2024.

The plans will mean PV additions through tenders in Germany, Spain, and France, among others.

Spain's government set a goal to build 28 GW of new wind capacity and around 30 GW of PV capacity by 2030 in its NECP submitted last April.

PPA route to market

PV farms are developed in Spain not only through government tenders to add to electricity supplies, but also through private power purchase agreements (PPAs) with companies seeking to buy renewable energy to reach internal greening goals.

Spain's solar market has had a rocky ride over the last two decades, according to a blog by Michael Ware, director of global advisory firm Green Giraffe in London.

After becoming known as the country leading the world in concentrated solar power plants, Spain endured a period of stagnation after a 2008 cut to subsidies for solar facilities. The sector revived in 2018 after the Spanish Socialist Workers Party, or PSOE, came to power on a pro-renewables platform, with the market for PPAs rebounding and international investment increasing, he said.

Posted 08 April 2021 by Cristina Brooks, Senior Journalist, Climate & Sustainability, IHS Markit

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