The Iberian electricity market after COVID-19
The Iberian power market has reached the long-awaited ‘grid parity’, and merchant investments in renewable energy have blossomed since the end of 2019.
The Spanish and Portuguese Governments have also submitted their NECPs to the European Commission with extremely ambitious renewable energy targets, and a commitment to gradually close all nuclear capacity in Spain.
But cannibalisation risks cast doubt on the economic viability of merchant investments, and a wide range of technical and regulatory aspects challenge the feasibility of the PNIEC targets.
Substantial amounts of new storage will also be required to ensure security of supply and the integration of such high volumes of renewable generation. This could be enabled by a ‘framework for storage’, which is under discussion as an alternative to today’s dysfunctional merchant economics.
- security of supply issues;
- drivers of power prices, such as demand, commodities and the capacity mix;
- the financial sustainability of the sector; and
- relevant aspects of energy policy.