macroeconomic impact of res in spain-2010

7/31/2019 Macroeconomic Impact of RES in Spain-2010

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YEAR 2010

Study of the

Macroeconomic Impactof Renewable Energiesin Spain



Elaborated by:Deloitte

www.deloitte.com

Edited by:Spanish Renwable Energy Association | APPAwww.appa.es

Designed by:Estudio 91nueveunowww.nueveuno.com

English version of this study provided by:APPA and Holtrop S.L.P. Transaction and Business Law

Study of the

Macroeconomic Impactof Renewable Energiesin Spain

YEAR 2010

http://www.appa.es/

http://www.holtropblog.com/



Executive Summary ...................................................................................................................... 5

Te Study ..................................................................................................................................... 15

Penetration of renewable energies in Spain .............................................................................. 19

Te Renewable Energy Sector: economic evaluation ................................................................ 23

Employment generated by the renewable energy sector ............... ........................................... 73

Impact of renewable energies in the environment and in energy dependence ....................... 77

Renewable energies incentives resulting from electricity generation ........................... ............ 91

Economic impact in the wholesale electricity market derived fromrenewable energies belonging to the special regime ................................................................. 95

Te electricity tari de cit and the saving provided byrenewable energies in the Spanish electricity market ............................................................... 99

Te cost of electricity supply in Spain ...................................................................................... 103

Comparison between the evolution of historical costof adjustment services, capacity payments and losses in the system,and the level of penetration of renewable energy ................................................................... 111

E orts of renewable energies developers to connect their installations to the grid.............. 117

Impact on human health ................... ...................................................................................... . 121

Te energy policy objectives and renewable energies .............................................................. 125

Conclusions ................................................................................................................................ 135

Index of gures ....................................................................................................................................138

Index

STUDY OF THE MACROECONOMIC IMPACT OF RENEWABLE ENERGIES IN SPAIN | YEAR 2010



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This trend of job losses, which had alreadybeen observed in 2009, is mainly caused bythe reduction of activity levels of auxiliary

industries of almost all technologies, includingwind power, solar energy, biomass, small hydropower and biofuels.

Contrary to the results of employment, theSector contribution to GDP has increased,although this effect is solely due to an increasein income from energy producers and marketers(not producers) of biofuels. The uncertaintycaused by the lack of a compensation for sometechnologies from 2013 onwards has made itimpossible for project promoters to develop new

investment, assuming a reduction in equipmentmanufacturing activities and provision ofspecialized services. Likewise, the biofuels

production capacity is underutilized, replacingdomestic production with imports.

In this context, the goal of reaching 12% oftotal energy demand in Spain in 2010 to becovered by renewable energy, required by Lawof 27 November on the Electricity Sector, hasnot been met, reaching just 11.3 % .

It must be pointed out that this percentagehas been obtained in an exceptionally highhydraulic year: considering the average

Te year 2010 has been an exercise with economic and socialcon icting results: while the contribution to GDP of theRenewable Energy Sector (1) has increased by 8.2% comparedto 2009, this growth has not been re ected in higher levels ofemployment, being suppressed during the last twelve months,approximately ve thousand direct and induced jobs. Teaggregated data for 2008-2010 further show the di cultsituation the Sector is facing, as there are about twentythousand lost jobs during that period .

Executive Summary

Unless otherwise speci ed, Renewable Energy Sector means the activities executed by renewable energies of the special regime,marine energy, small wind energy, geothermal energy, and biofuels.

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hydraulic year, then the percentage of primaryenergy consumption from renewable sources

in Spain would have been 10.4%, so therewould be a differential even bigger with theestablished targets.

The main results obtained in the 2010 updateof the macroeconomic study of the RenewableEnergy Sector are presented below:

The total contribution of the RenewableEnergy Sector to the GDP of Spain has beenapproximately ten billion euro, representing0.94% of Spain’s GDP.

The Renewable Energy Sector employed atotal of 111,455 people in 2010 of which54,925 correspond to direct employment and56,530 to induced employment (2). These datarepresent a drop in employment in 2010 ofapproximately 5,000 jobs.

In this sense, wind power, biomass, smallhydro power, solar photovoltaic and biofuels

registered a fall in the number of employeesboth direct and induced , while concentratedsolar power experienced an increase in jobsassociated with this technology (mainlyinduced) as a result of the installation ofapproximately 250 MW in 2010.

Electricity production from renewableenergies of the special regime has reached60,012 GWh in 2010, 21.8% of totalelectricity consumption in that year. Thishas avoided the emission of more than 32million tonnes of CO2 equivalent into theatmosphere, representing a saving in respectof emission allowances of more than 467million of euro .

In accumulated terms, during the period 2005-2010 the emission of more than 145 million

The update of this report includes as induced contribution to GDP of the Concentrated Solar Power Sector the plants under construc-tion during the years 2008, 2009 and 2010 that were not counted in previous editions, as part of the balance sheets of constructioncompanies and those not belonging properly to the Renewable Energy Sector. In this sense, it has been modi ed the induced contribu-tion to GDP of both this technology and the whole Renewable Energy Sector.

2

Direct, induced and total contribution to Spain’s GDP of theRenewable Energy Sector (2005-2010)

FIGURE 1

Executive Summary



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tonnes of CO2 was avoided, roughly 2483.5million of constant € (2010 base).

In 2015 and 2020, due to the penetration ofrenewable energy capacity of the special regimeforeseen in the draft PER 2011-2020 (3) , annualsavings of 43.8 million and 59.1 million tonsof CO2, respectively would be produced.

Moreover, the use of biofuels for transportprevented 3.8 million tons of CO2 emissionsin 2010 .

The generation of electricity using renewableenergy avoided imports of over 12.6 million

tonnes of oil equivalent (toe) in 2010. Savingsby replacing fossil fuel imports amounted to2302.2 million € , about 0.22% of GDP inSpain that year.

The cumulative savings for the period 2005-2010 amount to 11,168.3 million of constant€ (2010 base) .

Draft Renewable Energy Plan 2011-2020, of July 26, 2011, Ministry of Industry, Tourism and Trade.

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Direct and induced employment of the Renewable Energies SectorFIGURE 2



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According to the calculations carried out:

Electricity generation from renewableenergies avoided imports of approximately12.6 million tonnes of oil equivalent (toe) in2010.

In 2020 this gure would exceed 24.5million toe.

The substitution of imported fossil fuelby biofuel in 2010 was 1,194,312 toe ofbiodiesel and 235,819 toe of bioethanol, whichrepresented, in terms of energy a 5.00% anda 3.88% of total consumption of diesel andpetrol, respectively.

The difference between incentives receivedand bene ts generated by renewable energies(CO2 allowances savings and substituted

imports of fossil fuels) was negative in 2010 due to the increase of the amounts of feed-intariffs received by photovoltaic in 2009 (in2010 they have been virtually identical),and to a lesser extent by wind power andconcentrated solar power.

Electricity generation from renewableenergies of the special regime assumes that

the marginal price set forth in the DailyMarket is lower than the one obtained in theabsence of such technologies. Renewableenergies replace conventional generationunits with a high marginal cost that wouldset higher marginal prices. This cheapeningwas of 4847.2 million € (€ 21.92 / MWh) (4) in 2010 .

In addition, it has been studied the evolutionof the main cost components of electricity

CO2 Emissions equivalent avoided by renewable energy productionFIGURE 3

Executive Summary

Power guarantee and technical restrictions not included.4



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Evolution of the substitution of fossil fuel imports (tons of oil equivalent)FIGURE 4

Comparison between the economic impact derived from avoided CO2 emissionsand reduction in energy dependence, and of the feed-in tariffs received by theRenewable Energy Sector

FIGURE 5



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supply in Spain in recent years, according toinformation published by the National EnergyRegulator (Commisión Nacional de Energía)and the results of the Spanish electricitymarket. The study reveals that:

1. The payments for the generated electricity,sum of the payments made to the ordinaryregime and the special regime for the period2005-2010, grew at an annual average of3.9%, lower than the total costs of electricitysupply, 4.6% .

2. The growth in payments for generatedelectricity has been lower than the evolution offossil fuel prices : a barrel of oil has increased

by 42.6%, natural gas prices by 28.6% andcoal imported by 52%, while the cost paid forgenerated electricity was reduced by 4.4%in € / MWh.

3. The growth of demand in this period wasmuch lower compared to the increase ininstalled capacity: 5.8% during the period,compared with an increase in installed capacityof 34.1% (5) , from a coverage rate that in 2005was already suf cient.

Broken down by generation technologies, theinstalled capacity of combined cycle naturalgas power plants was the one that increasedmost during the period 2005-2010 , 13,389

Annual depreciation due to the penetration of renewable energies in the OMEL Daily MarketFIGURE 6

Executive Summary

Source: Spanish Transmission System Operator (Red Eléctrica de España)5



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Comparison between the evolution of the price index of fossil fuels and the payments for thegenerated electricity

FIGURE 7

Cumulative growth of installed capacity vs. electricity demand.FIGURE 8



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MW, followed by wind power with 9,554 MWand the other renewable energies (mainly

solar photovoltaic and concentrated solarpower), 4,517 MW.

As a result of the analysis of investments ingrid connection infrastructure undertaken by

the promoters of renewable energies, it hasbeen estimated that they would amount to1504.5 € million for the period 2002-2010 .

Executive Summary



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Installed capacity of Coal, Combined Cycles (Natural Gas), Wind Power and Other RenewableEnergies of the Special Regime. Source: Spanish Transmission System Operator (RedEléctrica de España) and National Energy Regulator (Comisión Nacional de Energía)

FIGURE 9

Estimated investment in grid connection infrastructure (2002-2010)FIGURE 10



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Both for its activity gures as well as for thenumber of jobs it generates, the RenewableEnergy Sector is undoubtedly one of the

references of our economy worldwide. Thisfact is more evident if you look at the guresrelating to exports of goods and services, directinvestment by Spanish companies abroad,the competitive positioning of said companiesin different markets or demand for skilledprofessionals in our country.

However, in the last two years, the RenewableEnergy Sector has developed unevenly inits different technologies and sub-sectors ofactivity. While energy producers have seen asustained growth in its contribution to GDP,these increases have not been re ected in the

manufacturing industries of equipments andcomponents, or in the provision of speci cservices.

In 2009 and 2010, the sector’s evolution hasbeen in uenced by the uncertainty generatedfrom the publication of the Royal Decree Law6 / 2009, as well as by the effects of theeconomical crisis and the emergence of newinternational competitors with more competitivecosts structures.

The existing uncertainty in the absence of aregulatory framework for some technologiesfrom 2013 onwards has conditioned theinvestments of the companies , and thereforethe installation of new capacity. The lower

Te Renewable Energy industry in Spain has been an engine ofeconomic growth and territorial development in recent years.Te penetration of these technologies has helped to ful ll thecommitments made by our country for the reduction of long-term environmental e ects and the high cost and risk involvedin having a high energy dependence.

Te Study



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activity of the national companies has madethem loose some of its competitive position

against foreign competitors. In this sense, forthe future it would be paradoxical that havinga domestic industry that was at the vanguardof technology very recently, the objectives for2020 must be met by importing equipmentsand components from abroad .

Te ScopeThe following study evaluates quantitativelythe impact derived from the development ofrenewable energies from different points ofview in Spain in the last years:

Economic and social

Direct contribution from the renewableenergy sector and the different subsectorsto the GDP in nominal and real terms fromthree perspectives: value added by eachactivity, nal demand and remuneration ofthe factors contributing to the developmentof the activity.

Import and export of the sector and relevanceof Spanish companies internationally.

Indirect impact on the rest of the economythrough spillover effects quanti ed with aninput-output model.

Taxes paid by the renewable energy sector.

Technological Development: relevance of theindustry in R&D investments.

Creation of direct and induced employmentby the sector.

Environmental

Contribution of renewable energies inavoiding the emission of greenhouse gases(GHG) and other harmful gases.

Contribution to achieving the objectives ofpenetration of renewable energy.

Energy Policy

Contribution of renewable energies in termsof energy dependence: substitution of theimports of coal, natural gas and derivates ofcrude oil, and economic assessment of theimpact of reducing energy dependence.

Evaluation of other externalities

according to the arguments in which there is awide scienti c consensus.

The scope of the analysis of the economicimpact of renewable energies in Spain includesthe following sectors :

• Biofuels• Biomass

• Wind power• Geothermal high/low temperature and depth.• Small hydropower• Marine• Small wind energy• Concentrated Solar Power• Solar Photovoltaic

Additionally, the study includes the followinganalysis :

The economic quanti cation, according to a

statistical sampling of the efforts renewableenergy developers have made to connect theirfacilities to the grid .

Te Study



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A comparative evaluation of the goals established by the National Renewable

Energy Action Plan (NREAP) and thoseforeseen by the draft of the RenewableEnergy Plan 2020.

The quanti cation of the savings producedby renewable energies in the electricity

wholesale market resulting from the existenceof renewable energies.

The evolution of the components of theelectricity tariff for the period 2005-2010.



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Primary energy consumption from renewablesources in Spain in 2010 amounted to11.3% , representing a relevant increasecompared to 9.5% in 2009: however, theobjective established in Law 54 / 1997, ofthe Electricity Sector, of 12% has not been

achieved (subsequently neither the objectiveforeseen in the PER 2005-2010 (12.1%).

It has to be noted that this percentage,11.3%, has been met within an exceptionallyhigh hydraulic year: considering an averagehydraulic year, the percentage of primaryenergy consumption from renewable sourcesin Spain would have been 10.4%, so that thedifferential with the established targets wouldhave been even bigger.

The production of electricity from renewableenergies of the special regime reached60,012 GWh, representing 21.8% of totalelectricity demand in 2010 (6) . Wind powercontinues being the technology producing themost electricity, with approximately 71.8%

of the total special regime, followed by solartechnologies (photovoltaic and concentratedsolar power) with 11.7%, small hydro with11.2% and biomass with 5.2%.

In terms of installed capacity, the totalrenewable capacity belonging to the specialregime was, at December 31, 2010, of26,746 MW . By technologies, wind power isthe most proliferated, with 19,649 MW, therest of the capacity is divided between solar

Te year 2010 has shown a signi cant increase in thepenetration of renewable energies in Spain in terms of installedcapacity and power as well as of energy production:

Penetration of renewableenergies in Spain

Sources: Renewable generation under the special regime, the National Energy Regulator (Comisión Nacional de Energía);electricity demand, Spanish Transmission System Operator (Red Eléctrica de España).

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photovoltaic and concentrated solar power(3,847 MW and 532 MW, respectively),

hydro power (2,004 MW) and biomass(714 MW). By region, Andalusia, Castile-LaMancha, Castile and León and Galicia are thegeographic areas with the highest amount ofinstalled renewable energy capacity.

In 2010, the consumption of biofuels inSpain accounted for in terms of energy,

4.79% of motor fuels, with a market shareof 5.00% of biodiesel over diesel fuels andfor 3.88% of bioethanol with regard to petrol(compared to 3.67% and 2.49% in theprevious year, respectively).

Installed capacity for electricity generation by technology of the special regime (MW) by theend of 2010. Source: National Energy Regulator (Comisión Nacional de Energía)

FIGURE 11

Penetration of renewable energies in Spain



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Penetration of biofuels in Spain in terms of energy content. Source: APPAFIGURE 12



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Macroeconomic Impact of renewable energies

The following shows the evolution of keymacroeconomic variables with respect to theRenewable Energy Sector in Spain during2010:

The direct contribution (7) to GDP of Spain’sRenewable Energy Sector in 2010 amountedto 6,744.0 million € , compared to 6,170.5million € in 2009, in nominal terms.

Evaluated in constant euro of 2010, thedirect contribution to GDP of the Renewable

Energy Sector grew by 8.2% with regardto 2009 . In terms of comparison with thetotal of the economy, the direct contributionof the Spanish Renewable Energy Sector

represented approximately 0.63% of Spain’sGDP in 2010.

The difference between the growth rates ofthe different components of GDP compared to2009 re ects some of the main features of theevolution of the Renewable Energy Sector in2010:

There has been an increase in industryrevenue, amounting to approximately 26,000million € , mainly due to the increase of

Te Renewable

Energy Sector:economic evaluation

Including the activities of promoters of facilities, energy producers, equipment and components manufacturers, and renewable energyservices providers.

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energy sales of producers of wind power,hydro power and biomass, similar income

levels as in 2009 for photovoltaic producers,and the incorporation of the producersof concentrated solar power of the plantsinstalled between 2006 and 2009.

On the other hand, marketers (not producers)of biofuels have seen an increase in theirincome by raising the quantities consumed asa result of compliance with the obligation ofpenetration of such fuels.

However, as it happened in 2009, therevenue growth of electricity producers aswell as marketers (not producers) of biofuelshas not been translated into an employmentgrowth . In this sense, all the technologieslisted above, except for concentrated solarpower, have lost jobs during 2010. Thisis due to ancillary industries that havereduced their level of activity: in the case oftechnologies for generating electricity, forthe low level of installed capacity in 2010,and in the case of biofuels, because of fuel

imports which resulted in an underutilizationof installed capacity, having a negative

impact on direct employment, as well as theimport of raw materials and its impact onindirect employment.

The amounts satis ed in terms of salariesand wages to workers in the sector have beenreduced by 3.2% due to staff reductionsexperienced in 2010.

The consumption of xed capital(depreciation) increased by 23.2% .

The exports of the Renewable Energy Sectorstill exceed the imports and consequentlythe sector shows a positive trade balance .However, it should be noted that thedifference between exports and importshas been reduced signi cantly since 2008,from 1,246.8 million € to 657.0 million € ,both in constant terms (2010 base), mainlydue to an increase of biofuels imports . Thisfact represents a decrease of approximately46.5% of the trade surplus in that period.

Relevance of the direct contribution to GDP of the Renewable Energy Sector with

respect to GDP of Spain

FIGURE 15



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While both concepts, exports and imports,experienced a growth during 2010, the rst

increased at a rate of 5.4% while the latterincreased at 10.2%.

The most relevant facts related to exports ofgoods and services during 2010 have beena slight increase in the export of equipmentand services related to solar photovoltaic

and a cyclical increase in exports ofbiodiesel to Italy.

Regarding imports, the subsector ofbiodiesel has been seriously affected onceagain by the trade policies applied in thirdcountries so that it cannot compete withimported products from Argentina, mainly,and Indonesia.

Direct contribution to GDP of the Renewable Energy Sector (2005-2010) -

million of current €

FIGURE 16

Te Renewable Energy Sector: economic evaluation



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Additionally, it should be noted that whilethe growth of the concentrated solar power

industry in Spain has led to a rise in importsof equipment, it currently exists in ourcountry the ability to develop a very highpercentage of plants with domestic products,which can be a competitive advantage inthe future, and which in turn could result inpotential exports once the sector is developedin other countries.

In terms of direct presence abroad, 143companies with direct activity in othercountries have been identi ed, with an activevolume of more than 28 billion € .

It is important to remark that when comparingthe evolution of the GDP contribution of the

Renewable Energy Sector versus the energysector as a whole, or the whole Spanisheconomy, renewable energies have grown fasterthan the rest during the last ve years .

As mentioned above, when analyzing thedifferent technologies a similar trend is observedamong almost all of them: in 2010 there wasan increase in revenues for energy producersand marketers of biofuels (not producers) thathas not resulted in an increase of the auxiliaryindustry revenues and production of biofuels norin creation of employment .

Direct contribution to GDP of the Renewable Energy Sector (2005-2010) -

million of constant € (base 2010)

FIGURE 17



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Impact of the renewable energy sector in exports and imports, and net exportsin the period 2006-2010 (million of constant € base 2010)

FIGURE 18




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Comparison between annual growth rates of Spain’s GDP and the contributions

to GDP of the Energy and Renewable Energy Sector

FIGURE 19

The exception in 2010 was mainlyconcentrated solar power, whose increased

contribution to GDP is mainly the result ofthe installation of new plants than of the saleof energy.

Likewise, technologies less developed inSpain, such as geothermal, marine power andsmall wind power, continue with developmentactivities and the introduction of technology,although their contribution to GDP remains lowin comparative terms.

In the future, the evolution of the contributionto GDP of the different technologies willdepend on the growth of its installed capacity

in Spain, and the ratio of use of it, thepenetration of biofuels in the market, the

price of energy sold and the ability to competeagainst new international scenarios. All of thesevariables, in turn, will very much depend on theevolution of the following factors:

The establishment of the new remunerationmodel for the energies of the special regimein 2013 . In this sense, the existence of astable and predictable regulatory framework,and that properly assess the investmentsto be made by the promoters of thesetechnologies is essential to eliminateuncertainty and mitigate risks arising fromthese projects.



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Growth rate of the different technologies in constant terms

Direct contribution to GDP of the different technologies (million of current € )

FIGURE 21

FIGURE 20




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The market prices of fuels and weatherconditions (rainfall and temperature) , which

determine the market price of electricity.

The existing dif culty at the administrativelevel to obtain permits and licenses forcarrying out the different projects.

The development of market models that mayallow a higher number of forward contractswhich reduce the uncertainty regarding thebehaviour of prices.

The establishment of schemes to manageportfolios of different generation technologies allowing to cover the excess or de cit

of generation with energy from othertechnologies.

The presentation of the programs to theMarket Operator and the System Operator attimes closer to the dispatch of energy.

The establishment of a regulatory mechanismthat allows reducing the impact on thebiofuels production sector of the restrictivetrade practices from competitors of othercountries as well as more ambitiousmandatory targets of biofuels use for thecoming years.



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Fiscal Balance

Additionally, from the information compiled bythe companies from the sector, the amountspaid by them rwgarding national and local taxeshave been identi ed, as well as the subsidiesthey have received.

During the period analyzed, 2005-2010,the sector has been a net contributor in all

periods; this means that the taxes paid havesurpassed the funds received in the form ofsubsidies (8) . In 2010, the difference betweenthe taxes paid and subsidies received has beenof 747.6 million € .

Fiscal impact of the Renewable Energy Sector in SpainFIGURE 22

Operating subsidies for exploitation from the European Union, Autonomous Communities and the remaining Public Administrations.

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Contribution to R&D&I

Investment in R & D & I in 2010 wasapproximately 302.8 million € , approximately4.5% of the total contribution to GDP of theRenewable Energy Sector. This percentage is

much higher than the national average, whichin 2009 (9) stood at 1.38% of the GDP. This

high difference is due to the fact that this is anevolving technology sector and, indeed, some ofthe technologies such as marine and geothermalenergy develop mainly R & D & I activities.

Efforts in R +D + i with respect to GDPFIGURE 23

Source: Spanish National Institute for Statistics, 2009 is the last year having available information

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Induced Impact on GDP

From the use of input-output tables constructedspeci cally for the Renewable Energy Sector,there have been calculated induced impactcoef cients of an increase in nal demand foreach of the technologies. These coef cientsrepresent the spillover effect of an economicsector in the other branches of the economy.

During 2010, the induced impact on GDP ofthe Renewable Energy Sector amounted up to

3,254.3 million € . Adding up the direct andinduced contribution, the total contribution of the

Renewable Energy Sector to the GDP of Spainreached almost 10,000 million € , representingapproximately 0.94% of Spain’s GDP .

The most relevant features of the differenttechnologies are detailed below:

Although the contribution to GDP of thewind power sector has been reduced, thistechnology is still the one generating the

Direct, induced and total contribution to Spain’s GDP of the

Renewable Energy Sector (2005-2010)

FIGURE 24




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Relevance of the Renewable Energy Sector in terms of Spain’s GDP, period 2005-2010FIGURE 25

greatest induced contribution, as there is astrong network of ancillary industries. In 2010,

this contribution was higher than 1,171.0million € , and if it is added to its directcontribution, then its weight within the wholeRenewable Energy Sector amounts to 29.8% .

The growth of induced contribution to GDPof the concentrated solar power sector is veryimportant in 2008, 2009 and 2010, which

this last year was approximately of 1,013.3million € ; when added to these amounts

the direct contribution, its weight within thewhole Sector amounts up to 16.5% .

It should be noted that the update of thisreport includes as induced contribution toGDP of the Concentrated Solar Power Sectorthe plants under construction over theseyears, as it is part of the balance sheets



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of construction companies, being 2010 ayear especially relevant in terms of induced

impact of this technology.

Photovoltaic solar energy has a lower inducedcontribution: 354.2 million € . Its totalcontribution (direct plus induced) remainsvery relevant as a result of income receivedfrom the sale of energy.

Induced contribution coef cients oftechnologies such as biomass, small hydropower and biofuels have been reduced since

the growth of these subsectors has occurredmainly because of the sale of energy and

not because of an increased level of activityin industrial areas. For this reason, inreal terms, the induced contribution hasremained unchanged despite the increaseddirect contribution.

The small wind, geothermal and marineenergy technologies are still not relevant interms of its contribution to GDP, providedthat they globally do not reach 1% of theRenewable Energy Sector.

Percentage distribution of contribution to Spain’s GDP segmented by the differentrenewable technologies (2010)

FIGURE 26




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Direct and induced contribution to GDP – breakdown by technologiesFIGURE 27



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Economic Impact: biofuels

The total contribution to GDP of the biofuelssector was 494.0 million € in 2010 : 334.8million € as a direct contribution and 159.2million € as induced contribution. Thistotal gure represents a growth of 39.7% ofcontribution to GDP compared to 2009.

Despite the gures recorded in the contributionto GDP of this sector, it is important to notethat the observed growth came mainly due tothe increased consumption of such type offuels derived from the major use obligations set

for 2010 and from the commercial margins byoil operators in the sale of biofuels.

Aggravated to what happened in 2009, thedomestic production of biodiesel is in a criticalsituation, since most of the supply of this fuelby the oil operators is carried out by usingimports from countries that, in many cases,develop business practices that may restrictcompetition, against which domestic factoriescannot compete.

Broken down by type of biofuel, the totalcontribution to GDP of the subsector of

Contribution to the GDP of the Biofuels SectorFIGURE 28




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Direct and induced contribution to GDP by type of biofuel

Level of penetration of biofuels in Spain

FIGURE 30

FIGURE 31




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2011, as a result of supply problems and risksarising from the riots in northern Africa, the

Council of Ministers amended these objectivesby means of the Royal Decree 459/2011, ofApril 1, approving an increase in both theglobal biofuels obligations, which amounted to6.2%, 6.5% and 6.5% for 2011, 2012 and2013, respectively, as well as the obligationsof biofuels in diesel, which rose from 3.9%,4.1% and 4.1% for 2011, 2012 and 2013,respectively, to 6% for 2011 and 7.0% for2012 and 2013. The objectives of biofuelsin petrol remained, however, at the samepercentages xed by the RD 1738/2010(3.9%, 4.1% and 4.1% for 2011, 2012 and2013, respectively).

The cumulative consumption of biofuels in2010 is estimated to have increased by 35.3%from 2009 to 2010 from 1,264,647 tonnes to1,711,122 tonnes.

However, as it already occurred in 2009,this increase in consumption has notbeentranslated in 2010 into an equivalentincrease in production and sales of theSpanish manufacturing industry in the

domestic market because, for example, over60% of the consumption of biodiesel wassatis ed by imports. This situation, greatlyaggravated in 2010, as explained in thefollowing sections, has led to the paralysis ofthe Spanish biodiesel industry.

The biodiesel case

The biodiesel consumption in Spain rosein 2010 to a total of 1,349,538 tonnes,representing an increase of 31.2% compared

to 2009. Although a part of this increase wassupplied by domestic production, approximately60% of domestic consumption has beenprovided by imports, mainly from Argentina andIndonesia.

In 2010 a total of 825,000 tonnes of purebiodiesel were imported, from which a 53%stemmed from Argentina and 24% fromIndonesia. The inability of the Spanish industryto compete with biodiesel coming fromthese two countries is due to the system ofdifferential export taxes that these countriesapply. For instance, Argentina applies an exportrate of soybean oil of 32%, while biodiesel

produced from this raw material is only taxedwith a gross rate of 20%.

As Argentina and Indonesia are among theworld’s leading producers of palm oil andsoy bean oil, respectively, they mark thereference prices of these raw materials. Thefact of applying differential rates does generatea signi cant competitive advantage overproducers from around the world using thesame raw materials.

Therefore, in order that the above mentionedincrease of the obligation of biodiesel intransport up to 7% for 2012 and 2013 ispositive for the production sector in Spain, it isnecessary to take urgent steps to block anti-competitive practices of biodiesel imports fromArgentina and Indonesia.

While waiting for the adoption of suchmeasures, the fact is that, although Spanishindustry has more than twice the capacityneeded to supply the obligations of biodieselconsumption in diesel legally set, about 75% ofthe 48 biodiesel manufacturing plants remainstalled because of these imports, the vast

majority of the remaining plants are operatingat idle speed .

The shutdown of a large part of the factoriesand the underutilization of the capacity ofmany other factories are provoking a severesituation in the sector, causing that manycompanies are actually in a very delicatesituation, being forced to close down or atleast, to cease temporarily their activities.

In this context it is worth mentioning that the

Ministry of Industry, Tourism and Trade inOctober 2010 presented a draft MinisterialOrder with the purposes of promoting EUproduction of biodiesel by establishing aprocedure for annual allocation of up tove million tonnes of production betweenSpanish facilities and the rest facilities of theEuropean Union.

While this draft Ministerial Order was favorablyreported by the National Energy Commissionand the Council of State, its nal approvalremains stalled since June 2011, despite itsadoption being of vital importance for thesurvival of the Spanish biodiesel industry.



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The bioethanol case

The consumption of bioethanol has beenof 361,584 tonnes in 2010, representingan increase of 53% over the previous year.However, this increase of consumption has

not been accompanied with a correspondingincrease in sales in the domestic market of thefour existing bioethanol plants in Spain.

The production of these plants in relation to itscapacity was, nevertheless, much higher thanthat of biodiesel stations, reaching percentagesclose to 80%, mainly thanks to exports, whichin 2010 accounted for 48% of the sales.

Although the Spanish bioethanol industry isin a better position than its biodiesel industry,its total sales in 2010 only increased by 3%compared to 2009, its exports were reduced,while the imports to the Spanish market

increased by 142% with regard to the previousyear until having gained about half of theSpanish market for bioethanol. This set oftrends draw a panorama that, if not reversedproperly, can also put the bioethanol productionsubsection in Spain in a dif cult position.

The aforementioned increase of importscame mainly for regulatory reasons, whichcontributed to delay the possibility of directblending of bioethanol and gasoline. This ledthe oil operators to massively increase importsof ETBE, mainly from the United States,Netherlands and Brazil.

Since the automotive gasoline consumption inSpain is still much lower than that of diesel,bioethanol has represented in 2010 21.1%of the total of biofuels used, a slightly higherpercentage than the one achieved in 2009(18.8 %).

Percentage of utilization of production capacity of biodiesel plants in SpainFIGURE 32




43


Economic Impact: biomass

The biomass sector increased its contributionto GDP in 2010 compared to 2009, reaching1,089.2 million € . From this gure,702.9million € correspond to the direct impactand the remaining 386.3 million € to theinduced impact.

In real terms, this represented an increase of3.3% over the previous year . Among the reasonsfor this evolution is primarily a growth in revenuefrom the sale of electricity: 17.9% in 2010,although this growth has not been re ected in anincrease of industrial activity of the technology.

It is important to remark that the potential ofbiomass is still largely untapped in Spain: this

technology in 2010 only produced 1.4% of thecountry’s electricity and the installed capacityhas not met the targets xed in the PER 2005-2010, 2039 MW.

This fact turns biomass into the soletechnology of the special regime that has seenits objectives reduced in the draft of the PER2011-2020 compared to the previous Plan,jeopardizing the development of the sector thatreduces its weight within the mix of renewableenergies in the objectives establishedcompared to the previous Plan.

Contribution to the GDP of the Biomass SectorFIGURE 33



44

Growth rates of the Biomass SectorFIGURE 34




45


Evolution of installed capacity and energy sold of the Biomass SectorFIGURE 35

The development of biomass below its potentialis even more relevant when considering theadvantages it has, and the possibilities it has inour country in terms of:

The energy generated from biomass ismanageable : it is always available, it isconstant and predictable, and can beadjusted perfectly to the electricity demand.

It allows hybridization with other renewabletechnologies , as for example concentratedsolar power.

Generation of employment as being labourintensive, not only in the activity of energyproduction, but also in the fuel supply, thecleaning of forests, ...

Reducing emissions of greenhouse gases ,both by the substitution of fossil fuels as wellas by avoiding emissions resulting from thedecomposition of waste.

Additional positive environmental effects since the processes by which the biomass isobtained includes the cleaning of forests ( re



46

Revision of the biomass targets in the draft of the PER 2011-2020FIGURE 37

Biomass target according to PER 2005-2010 and situation in 2010.Source: National Energy Regulator (Comisión Nacional de Energía)

FIGURE 36




47


prevention) and the capacity of enhancingwaste, thereby reducing the pollution caused

by burning or burying most of these wastes.

Revitalization and development of theSpanish rural area .

The main obstacles that have prevented thedevelopment of this technology in our country are:

Lack of a compensation system that ensuresobtaining a reasonable pro tability of theinstallations.

There is a risk of raw materials supply : long-term contracts with suppliers have to beagreed, incorporating adequate guarantees.

Supply prices are volatile and must be agreedwith suppliers.

The technology is very heterogeneouswith a degree of maturity lower than othertechnologies.

Economic Impact:wind power

In the last two years, the wind energy sectorhas suffered a major contraction in its levelsof activity by installing a lower average numberof megawatts than those recorded in previousyears in Spain, reducing its competitive positionwith the emergence of strong competition fromcompanies located in countries with morecompetitive cost structures.

Despite the effects of the reduction in income,the wind energy sector remains the mostwidespread renewable technology in Spain, bothin terms of installed capacity and electricitygeneration. This is a very important contributionto GDP within the renewable energy mix.

In 2010, the contribution of this technologyamounted up to 2,984.3 million € , of which1,813.3 million € correspond to the directcontribution and 1,171.0 million € to theone induced .



48

In real terms, the wind power sector as a

whole suffered a fall of 6.9% in comparisonto 2009. The reduction in industrial activitywas very important, and only the increasein revenues from energy producers and thestability of prices in the electricity marketcushioned this fall.

The reduction in the contribution to GDP hashad a very relevant impact in terms of joblosses: in 2009 and 2010 more than 10,000direct and induced jobs were eliminated.

Regarding the penetration targets, according

to the data published by the National EnergyCommission, wind power has not reached thetarget of 20,155 MW established in the PER2005-2010 (10) .

Looking ahead, the draft of the PER 2011-2020 sets as target 35,000 MW for onshorewind and 750 MW regarding offshore wind: thewind energy industry can meet these objectivesas demonstrated in recent years, although itwill be essential to overcome the obstacles thatare slowing down its development.

Contribution to the GDP of the Wind Energy SectorFIGURE 38

Considering the installed capacity data published by the Spanish Transmission System Operator (Red Eléctrica de España), said targethad been exceeded.

10




49


Growth rates of the Wind Energy SectorFIGURE 39

Ful llment of the wind energy targets in the PER 2005-2010. Source: National

Energy Regulator (Comisión Nacional de Energía)

FIGURE 40



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The future of wind energy in Spain

During the period 2003-2008, the wind powerwas a reference of progress not only in Spainbut also in the global industry, experiencinga positive and stable growth over time. Theyear 2009 represented a turning point in theevolution of the sector: the uncertainty createdby the lack of a compensation framework asof 2013 onwards has signi cantly reducedactivity levels of domestic rms. It isimportant to note that in 2010 the installedwind power capacity worldwide grew by 22.5%

compared to 2009.

The lack of certainty regarding theremuneration of wind power (as well as the restof renewable energies) represents a barrier thatsigni cantly slows the development of futureprojects, affecting the entire industry valuechain of the Sector. Wind developers are facedwith an additional problem regarding access tonancing: nancial institutions can not lendmoney without knowing an estimate of therevenues from the sale of electricity.

To this fact it must be added the emergenceof numerous competitors who are able to offer

products at more competitive prices because

of its bene cial cost structures. While in2008 the third and ninth most important windturbine manufacturer globally in relation to thenumber of megawatts sold were Spanish, in2010 only one of them is ranked eighth.

In this context, the manufacturers of windturbine and of speci c components have lostcompetitiveness in international markets. Inorder to retake the path of growth and increasecompetitiveness, it is necessary to address thefollowing issues:

The establishment of a predictable andstable regulatory framework.

Realignment of the business models,focusing the efforts on those activities withthe highest added value.

A commitment to R&D& and innovation withthe aim of differentiating products.

A reduction of the requirements xed by theAutonomous Communities in wind powertenders, especially those not related to theindustry.




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Economic Impact:geothermal energy

Geothermal energy is the technology that makesuse of the energy that can be found under thesurface of the earth in the form of heat, inspeci c conditions of pressure and temperature.Depending on the characteristics of the resource,the stored heat can be used for electricityproduction and / or for heating purposes.

While in Spain the high temperaturegeothermal energy, the one that produces

electricity and needs higher temperatureconditions is currently in a study phase of thedevelopment potential, the technology for theuse of low temperature geothermal energy ismore developed: There exists in the marketa wide range of geothermal heat pumps thatallow the use of such energy for hot waterproduction, cooling and heating.

Contribution to the GDP of the High Temperature Geothermal Energy SectorFIGURE 41



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High Temperature Geothermal Energy

The high temperature geothermal energy sectorcontributed in 2010 with over 13.8 million€ to the GDP in Spain, corresponding mainlyto R&D and innovation activities aimed atevaluating the development potencial of thistechnology in our country.

The development of the high temperaturegeothermal energy can be an importanttool for meeting the goals of renewableenergy penetration for 2020, being an easilymanageable energy by using heat from theearth capable of operating twenty-four hours

a day. The potential of high-temperaturegeothermal resources in our country is

estimated at approximately 3,000 MW for thegeneration of electricity.

The draft of the PER 2011-2020 sets a targetof 50 MW for the year 2020, which wouldbegin to be installed as from 2017. Thetechnological challenges faced in achievingthis goal are related to success in researchand development of new drilling methods thatallow the reduction of the risks and costs ofthe technology as well as to the developmentof new technologies of stimulated geothermalenergy (EGS).

Growth rates of the High Temperature Geothermal Energy SectorFIGURE 42




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Contribution to the GDP of the Low Temperature Geothermal Energy SectorFIGURE 43

Low Temperature Geothermal Energy

The contribution of the Low TemperatureGeothermal Energy Sector in 2010 to Spain’sGDP amounted to over 14.95 million € .

The technology needed for the use of lowtemperature geothermal energy is developed,as it exists in the market a wide range of heatpumps that allow the use of this energy for hotwater production, cooling and heating.

Some of the advantages of low temperaturegeothermal energy are:

It is a technology with a very high energy yield.

It is an inexhaustible and self-suf cientresource, which can operate continuouslyproducing signi cant cost savings over itslifetime.

It has no negative sound or visual impact andno adverse effects in the subsoil.

It provides energy and cost savings comparedto traditional air conditioning systems.



54

Growth rates of the Low Temperature Geothermal SectorFIGURE 44

The draft of the PER 2011-2020 establishesa target of 50,000 toe for the year 2020 for

thermal uses of this technology, through directapplication in spas and air conditioning andheat pumps that can produce air conditioningand (sanitary) hot water.

For the coming years, this technology presentschallenges of reducing the cost of thermalgeneration and increasing the ef ciencyof geothermal heat pumps. The furtherdevelopment of this technology requires:

To promote a comprehensive support for thetechnology of low temperature geothermalenergy by the institutions.

To promote the formation of sector agentsand achieve the of cial standardization of

equipment: installer license, of cial seal foroptimum facilities.

To develop more standardized regulations,by harmonizing rules and proceduresfor installation between the differentautonomous communities.

To disseminate the technology to differentsectors of the population, both toprofessionals and users, in order to combatthe general ignorance that exists related tothis technology.




55


Economic Impact:marine energy

Marine energy contributed with approximately9.7 million € to the GDP in 2010, from which7.7 million € correspond to the direct impactand 2.0 million € to the induced impact .

Marine energy is currently in a research phase,mainly focusing on demonstration projectsthat exist today to identify the most ef cientprototypes to be comercialized. There is not yetin our country an industrial and commercialbusiness similar to that of other renewable

technologies, but there is an importantcommitment from the business sector (which

has the support of several autonomousadministrations).

The development of national technology fordifferent kinds of prototypes and investment intechnology demonstration centers suggests animportant industrial growth in the area of wavepower. Currently, the real generation costs arehigh, being out of the commercial range. Theway to reduce current costs lies in achievinga learning rate that allows its estimationregardless of the designs as well as an adequatesupport system to speed up the process.

Contribution to the GDP of the Marine Energy SectorFIGURE 45



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concluded that Spain has a signi cant marineenergy potential, in which for the characteristics

of our coast, the wave energy offers a resourceof high quality for its viability and development.

Galicia shows the highest values of energypotential, with an average power on depthsbetween 40 and 45 kW / m. The Bay ofBiscay is, in second place, the next area ofthe coastline in terms of resource (about 30kW / m decreasing from West to East). Thirdly,the north façade of the Canary Islands (with20 kW / m). Finally, the south façade of theCanary Islands, together with the SpanishMediterranean and the Gulf of Cadiz showannual average values of less than 10 kW / m.

The publication of this document, together withthe national objectives in this sector, will be

the starting point for the expected growth of themarine renewable energy sector in Spain.

The draft of the PER 2011-2020 foresees theinstallation of a capacity of 100 MW for 2020.Likewise, this document notes that currently,the costs of marine energy generation are highand not competitive with other technologies,therefore the installation of commercial plantsis not expected in the short-term although it isconsidered the possibility of installing small-scale plants in a shorter period of time.

Likewise, several Technology DevelopmentCenters are planned or are in operation inAsturias, Cantabria, Basque Country and theCanary Islands, which will focus on research,development, testing and operation of powerconverters obtained from the waves of high sea.



59


important market potential, and that willenable the creation of a business networklinked to employment in a distributed mannerthroughout the country.

During 2010, the sector has been witness,together with the Administration, of severalmilestones that will establish the frameworkof the small wind energy (or small windpower) during the next few years, and thatmay result in the nal takeoff of the nationalsector. The reception of all agents in thesector has been positive, since it seems that

it begins to take shape a horizon in whichsmall wind energy, with its character ofdistributed energy, can be a further renewabletechnology for the energy mix.

On the one hand, in June 2010, theGovernment of Spain, following the indicationsof the European Directive 2009/28/EC onthe promotion of renewable energy (whichestablished the obligation of Member States todevelop a National Renewable Energy ActionPlan, NREAP 2011-2020), sent the documentto the European Commission.

Contribution to GDP of the Small Wind Energy SectorFIGURE 47



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In this document, for the rst time the smallwind energy was included in the National

Energy Planning for 2020 and a series ofmeasures to promote small wind power, as wellas to achieve the implementation of 370 MW inthat period was established.

Among the measures established in the SpanishNREAP 2011-2020, are remarked the “Speci c regulatory processing and the establishment of a suitable remunerative framework so as to provide incentives for small wind facilities (...)”,“Set up accreditation systems for low power wind energy installers” and “Develop a suitable framework whereby to simplify, standardize and unify administrative procedures for the authorisation of renewable energy installations,including simple noti cation.”

Likewise, for the rst time, the draft PER2011-2020 establishes a differentiation at

regulatory and remunerative level of the smallwind energy , by xing a capacity target of 300MW for small wind power for 2020.

The establishment of differentiated targets forsmall wind energy can produce a major boostfor this technology in Spain, since our countryhas a strong national business network at aninternational level, consisting of manufacturers,promoters and producers who offer high qualityproducts, both for integration in housing andfor conenction to the grid. Up to 100,000small wind energy installations are expectedto be installed in the country over the next tenyears if the objectives of the draft of the PER2011-2020 are met.

Growth Rates of the Small Wind Power SectorFIGURE 48




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In this sense, it is necessary to facilitate theadministrative procedure of small wind powerinstallations and its connection to distributiongrids. The draft of the PER 2011-2020 alsoconsiders that the remuneration framework has

to take into account the speci c features ofsmall wind power relative to the current state ofthis technology, its costs and its advantages.

In March 2010, the Ministry of Industry,Tourism and Commerce, published a draftRoyal Decree of Connections of Smallelectricity generation facilities, with the aimof simplifying administrative procedures forinstallations up to 100 kW that are connectedto the grid (so far it was one of the greatestbarriers to small wind power penetration) and

encouraging self-consumption.

Likewise, this draft Royal Decree stipulatedan abbreviated connection procedure forinstallations under 10 kW, also opening thedoor to the Net Metering (the sale and billing ofthe difference between the net electrical energyproduced by the power generation facilityand the electricity consumed by the electricalconsumer). This regulation was nally adoptedthrough the Royal Decree 1699/2011 of 18thof November.

For all the abovementioned, there is still muchwork to do for small wind energy to become

a reality in Spain, so the sector is workingon two aspects that are deemed essential:the certi cation of the equipment and theregulation at municipal level:

As for the certi cation of equipment, thereis an international standard, IEC 61400-2, but it is very expensive for the volumeof business existing in Spain today. That iswhy work is underway to establish a nationalcerti cation procedure (rigorous whileexible) that support the proliferation of safeand ef cient facilities so that the sector candevelop in an orderly manner once the newlegislation comes into effect. It is of vitalimportance to prevent the entry into themarket of wind turbines that do not meet

the minimum standards of quality and thatcan undermine the market and consumercon dence.

The European Directive 2009/28/EC onthe promotion of renewable energy urgeslocal authorities to incorporate ordinancesregarding the use of renewable energy. Atmunicipal level, public administrations areaddressing important initiatives to promoterenewable energy sources. In this sense,during 2010 the sector has worked togetherwith interested institutions, in a documentthat establishes guidelines to facilitatethe installation and construction of small



62

wind energy systems at municipal level andwhich are subject to reasonable restrictions,

preserving health and public safety.

Thus, it aims to unify criteria and toensure quality installations that allowan orderly growth of small wind energyin Spain. Establishing a legislation (nownonexistent) to set forth certain minimumrequirements on noise and vibration;providing municipalities with the procedureof small wind installations, removing thecomplexity and the lack of knowledge thatexists today; introducing energy criteria inbuilding projects, improving environmentalconditions in cities, and nally showing thepossibilities of generating clean and localenergy (education and awareness building).

Small wind energy has important advantagescompared to other renewable technologies. Thefollowing can be highlighted:

It has a greater potential of overall ef ciencythan big wind power installations, becauseit prevents the losses that may occur intransmission and distribution grids.

It enables the provision of electricityin isolated areas and remote from theelectricity grid.

Its use does not require the construction ofnew electricity infrastructures. Furthermore,it is not necessary to carry out signi cantworks for the installation of small windturbines.

It can be combined with photovoltaic at

hybrid installations. The devices support speeds up to 200

kilometers per hour and have a useful life of15-20 years.

It produces electricity at low wind speeds.

It has a really low visual and noise impact.

As can be deduced from the internationalexperiences that demonstrate the possibilityof penetration of small wind power in theelectrical system, wherever the conventionalgrid has a principal implantation, the

application of small wind power in distributedgeneration is considered as a large market

opportunity at global level. Spanish companiesare well positioned to compete in the market,not only nationally but also internationally, andthey only require a regulatory and remunerativeframework that enables the orderly growth ofthe domestic market.

This will require a speci c regulation to beapproved as soon as possible in order toencourage the market and the de nitivematuration of the technology, as it hasoccured in other technologies. This process ofindustrialization will enable the quick reductionof manufacturing costs and to improve thepro tability of the installations connected tothe grid. Thus, the projects will pay-off in areasonable time, the industry will respondpositively and the Spanish market will bede nitively developed (as it is happening in othercountries like the UK, U.S., Ireland, Portugal,Italy and the Netherlands) and will generatequali ed employment at local level (boost of theauxiliary industry, of installers, etc...).

Economic Impact:small hydropowerThe total contribution of the Small HydroEnergy Sector to the GDP in 2010 was 554.4million € , of which 406.4 million € in a directmanner and 147.9 million € in an inducedmanner. This has represented an increasein the contribution to GDP in real terms, ofapproximately 9.1% in comparison to 2009 .

Like it occurs with other technologies themain factor explaining the increase in thecontribution to GDP was the increase ofrevenues of the Sector from sales of energy.In this sense, 2010 has been an exceptionallygood year at the hydraulic level and electricalpower production has exceeded 6,700 GWh.This represents approximately 2.4% of theelectricity consumption in Spain and anincrease of 21.4% over the previous year, whenthe production was of 5,200 GWh.

Despite the strong increase in small hydropower production, the annual installed capacityremains limited: in 2010 only 13 MW were




63


installed, accumulating a total of 2,004 MWin Spain. The lack of power installation of thistechnology has not allowed to meet the targetsset in the PER 2005-2010: 2,199 MW.

The reasons behind the non-installation of newcapacity are the risk arising from this type ofprojects and administrative barriers that causethat obtaining permits and licenses for theinstallation of power is a dif cult and costlyprocess in terms of time and resources.

The draft of the PER 2011-2020 refers to thedevelopment potential of this technology inour country, citing as technological challenges

to obtain “the maximum ef ciency, to improveyields and reduce costs.” However, the Planalso notes that the speci c measures set forthe sector “focus mainly on the promotion ofhydroelectric development of existing hydroinfrastructures (dams, channels, water supplysystems, etc.) as well as to the rehabilitationand modernization of existing hydropowerplants.”

In this sense, the objective for 2020 is verysimilar to the target set in the PER 2005-2010.Its ful llment depends on the ability to solvethe problems mentioned above and in speedingup the granting of permits and licenses.

Contribution to GDP of the Small Hydro SectorFIGURE 49



64

Growth rates of the Small Hydro Sector in real termsFIGURE 50




65


Evolution of installed capacity and electricity generation of Small Hydropower(period 2005-2010)

Level of penetration of Small Hydro for the generation of electricity in Spain (2010)and energy policy objectives established in the PER 2005-2010

FIGURE 51

FIGURE 52



66

Economic Impact:solar photovoltaic

The direct contribution to the GDP of thePhotovoltaic Sector increased in 2010 to2,774.9 million € , with 354.2 million € ofinduced contribution. The total contributionto GDP has been 3129.1 million € , beingthe renewable technology with the highestcontribution to GDP in that year.

However, as in 2009, the high contribution tothe GDP of this technology is given mainly by

the entry into operation of over 2,500 MW in2008 and the resulting increase in revenuefrom the sale of energy.

As mentioned throughout this document, theincreased contribution to GDP did not translateinto job creation, on the contrary, in thephotovoltaic industry more than 15,000 jobswere lost in 2009 (direct and induced jobs)

Contribution to the GDP of the Solar Photovoltaic Energy SectorFIGURE 53




67


resulting from the scarce power installation in2010 of only 199 MW.

Likewise, 2010 has been a peculiar year interms of regulatory changes of the Sector:

Royal Decree 1003/2010, regulating thepayment of the equivalent premium for thefacilities producing electricity based onphotovoltaic technology in the special regime.

Royal Decree 1565/2010 of 19 November,regulating and amending certain aspects ofthe activity of electricity production in thespecial regime.

Royal Decree-Law 14/2010 of 23 December,laying down urgent measures to correct the

tariff de cit in the electricity sector.

Royal Decree 1565/2010 include the adoptionof technical measures which represent anadditional cost to the investments already madeby having to introduce new equipments andprocedures, and a limitation of the number ofyears with the right of perceiving incentivesto 25. In this sense, the R.D. 1565/2010represents a signi cant reduction regardingproject income and the obligation to carry outnot remunerated investments.

Growth rates of the Solar Photovoltaic Energy Sector in real termsFIGURE 54



68

Meanwhile, Royal Decree-Law 14/2010,introduces two limitations regarding the

equivalent operating hours for which the plantowners are entitled to receive the photovoltaicstariff: the rst affects all facilities dependingon their geographic location. The second,of temporary character, applies for 2011,2012 and 2013, and is a major dif cultythat threatens the ability of the owners of thefacilities to meet its nancial commitments.

In this sense, today there have been thousandsof appeals against the application of theseregulations: it is unquestionable that thisregulatory uncertainty discourages investmentin our country.

In this context, in the immediate future wedo not see a trend reversal, especially if one

considers that the draft of the PER 2011-2020envisages the installation of approximately 350MW photovoltaic annually up to 7,250 MW in2020, while for example Germany, installed7400 MW only in 2010.

The dif culties being experienced by thephotovoltaic industry in addition means wastingthe take-off of a technology that has seen amajor advance in its learning curve, increasedequipment ef ciency and their price reduction,making it much more competitive with othertechnologies. These effects are evident if onelooks for example at the international level, themarket grew by 130.6%.




69


Economic Impact:concentrated solar power

The direct contribution to the GDP in 2010 ofthe concentrated solar power sector went up to637.1 million € and the induced contribution (11) to 1,013.3 million € . The total contribution toGDP in 2010 was 1,650.4 million € .

These gures represent an increase in realterms of approximately 38.3% over 2009, theyear that had already seen a growth of 62.5% .

Unlike other renewable technologies, theconcentrated solar power sector has not based

its growth in 2010 in increased income fromenergy sales. The greater part of its contributionto GDP derives from the construction of plants.

Being a technology that requires an initialinvestment per megawatt very relevant, aboutthree to four times that of wind power, theincrease in installed capacity in our countryexperienced in 2008, 2009 and 2010 hasplaced concentrated solar power as the thirdrenewable technology in contribution to GDP.

Contribution to the GDP of the Concentrated Solar Power SectorFIGURE 55

The update of this report includes as induced contribution to the GDP of the concentrated solar power sector the plants under cons-truction during the years 2008, 2009 and 2010 that were not counted in previous editions, as part of the balance sheets of construc-tion companies and not those belonging properly to the Renewable Energy Sector. In this regard, it has been modi ed the inducedcontribution to GDP both of this technology and of the whole of Renewable Energy Sector.

11



70

It is important to note that concentrated solarpower has exceeded the targets set in the PER

2005-2010. 2010 Spain is the world leader inthis technology, with approximately 50% of theinstalled capacity worldwide.

Looking ahead, the draft of the PER 2011-2020 set a target of 4,800 MW by 2020: theful llment of this objective will depend onthe remuneration framework to be establishedfrom 2013 onwards and the capacity of thetechnology itself to increase its yields andachieve a reduction in investment costs andoperation and maintenance.

The concentrated solar power currently hasfour different technological solutions: channelor parabolic trough, central or tower receiver,linear re ectors type Fresnel and parabolicdishes with Stirling engines. Although atpresent the plants based on channel orparabolic trough technology are those thatdominate the market, each of the mentioned

solutions could nd its niche, adapting to thecharacteristics and requirements speci c of

each case.

Concentrated solar power entails very importantadvantages:

Spain has abundant solar resource

Is intensive in job creation during theconstruction phase and also during theoperation and maintenance phase

Is possible to provide these facilities withstorage devices, therfore these plants canmodulate the delivery of electricity to thesystem.

They can facilitate the integration of othertechnologies into the grid such as solarphotovoltaic or wind power and there existsthe possibility of hybridizing with other formsof renewable energy such as biomass.

Growth rates of the Concentrated Solar Power SectorFIGURE 56




5



73


If compared with the year 2008, the fall in thelevel of direct employment has been more than20,000 (in 2009 employment was reducedmainly in photovoltaics), approximately 27.2%

of the overall sector employment. The numberof direct jobs stands at 2007 values.

As mentioned throughout the document, thegrowth in the contribution to GDP, resultingfrom an increase in income from the saleof electricity and biofuels, has not been

re ected in an increase in industrial activitiesof the main technologies . In this regard

In 2010, the number of people employed directly by theRenewable Energy Sector was 54,925. Tis means that thenumber of jobs has fallen by 4,378 persons over the previousyear, which is 7.4%.

Employmentgenerated bythe renewable energy sector

Direct employment of the Renewable Energy SectorFIGURE 59



74

Direct and induced employment of the Renewable Energy Sector

Breakdown for technologies of direct employment in the Renewable Energy Sector

FIGURE 60

FIGURE 61

Employment generated by the renewable energy sector



75


except for concentrated solar power, andtechnologies still in phase of development

(small wind, geothermal and marine energy),all technologies have reduced the number ofdirectly employed workers.

The decline in industrial activities has alsocontributed a reduction in induced employmentin other economic sectors. In this sense, whenadded direct and induced employment thetotal number of jobs associated with renewableenergies in 2010 amounted to 111,455 .

It is important to note that the jobs generatedin the construction of the concentrated

solar power plants are included as inducedemployment and that it has largey mitigated

the reduction in the rest of technologies .For this reason, during 2010, the inducedemployment has been superior to the directemployment.

Evaluated by technologies, it is observed thatin wind, biomass, biofuels and solar PV havebeen lost in 2010: 4,972, 3,578, 1,175 and995 jobs respectively. By contrast, the numberof total jobs in concentrated solar power hasincreased by 5,244 .

Breakdown for technologies of induced employment in the Renewable Energy Sector (12)FIGURE 62

The update of this report includes as induced contribution to the GDP of the concentrated solar power sector the plants under cons-

truction during the years 2008, 2009 and 2010 that were not counted in previous editions, as part of the balance sheets of construc-tion companies and not those belonging properly to the Renewable Energy Sector. In this regard, it has been modi ed the inducedcontribution to GDP both of this technology and of the whole of Renewable Energy Sector.

12



6



77


Impact inelectricity production

In order to evaluate the effect of replacingconventional energy by renewable energiesfrom an environmental and energy dependencepoint of view the methodology used in previouseditions of this report has been replicated:

Step 1

Simulation of an electricity dispatch in which theproduction of electricity with renewable energiesis not taken into account (conventional hydraulicenergy was not replaced in this simulation) withthe aim of quantifying the amount of fossil fuelsthat has been/would be replaced.

For the period 2005-2010, the dispatch wasdone with the information of the demandin these years obtained from the Spanish

Energy Regulator (Comisión Nacional deEnergía). The mix of conventional energyused corresponds with that published by theSpanish Transmission System Operator (RedEléctrica de España).

In 2010, the renewable energy of the specialregime replaced 60,012 GWh of electricityproduction with fossil fuels.

For the years 2015 and 2020 the followingobjectives are considered for the generationof electricity from renewable energies setout in the draft of the PER 2011-2020 aswell as the mix of fossil fuels established in

Impactof renewable energiesin the environment andin energy dependence



78

Impact of renewable energies in the environment and in energy dependence

GWh of fossil fuels replaced by the production of renewable energies (period 2005-2010)FIGURE 63



79


Electricity production (GWh) by renewable energies in 2015 and 2020FIGURE 64



80

the “Additional Energy Ef ciency Scenario”of the same Plan.

Step 2

Quanti cation of the volume of avoided emissionsof CO2 (or that would be avoided in 2015 and2020) as a consequence of replacing fossil fuels.

The renewable energies (electricity production)have contributed to avoid 32,3 million tons of

CO2 equivalent in 2010 . In 2015 and 2020,as a consequence of the penetration of therenewable capacity foreseen in the draft of thePER 2011-2020, an annual saving of 43,8million and 59,1 million tons of CO2 would beproduced respectively.

Equivalent CO2 emissions avoided and to be avoided (2015 and 2020)

by renewable energy production

FIGURE 65




81


In accumulated terms, during the period 2005-2010 the equivalent of over 145 million tons of

CO2 emissions were avoided .

In economic terms, the impact of savings inCO2 emission rights would be very important:

Considering a price of 14.47 € (13) per ton ofCO2, the saving was 467.2 million € in 2010 .

In accumulated terms for the period 2005-2010, the savings amounted to € 2483.5

million (constant base 2010) .

Whereas in 2020, the estimated saving fromconsidering a price per ton of CO2 of 28.66€ (14) , would be more than 1,693.2 million € (constant base 2010).

Source: BLUENEXT - BNS EUA 08-12 (phase 2) - Bloomberg - PNXCSPT2 Index.

13

CO2 emissions avoided (2005-2010): cumulativeFIGURE 66

Source: International Energy Agency: World Energy Outlook 2010 - Price of CO2 emission rights in 2020 = 38 U.S. $ 2009,exchange rate 2010 (Bloomberg) 1 € = 1.335 U.S. $.

14



82

Step 3

Calculation of the emissions of other pollutinggases that are avoided by the generation ofelectricity with renewable technologies: NOxand SO2 .

Other gases harmful for humans are emittedduring the process of burning fossil fuels, such

as SO2 and NOx. According to our analysis theavoided emissions of these gases would be (15) :

In the following sections of this document theimpact that those gases have in human healthaccording to independent evaluations fromrenowned investigation institutes is evaluated.

Evolution of NOx emissions avoided by renewable energy useFIGURE 67


For the calculations the following sources have been consulted.

- PCI for fuels: Inventory of the emissions of greenhouse gases in Spain years 1990-2002 made in 2004 (Government of Spain-Minis-try of Environment ) and a Consultation to the Ministry of Environment (2005)

- Emission factor of NOx: Swedish Environmental Protection Agency

15



83


Step 4

Evaluation of the impact in terms of reductionof energy dependence derived from generatingelectricity with renewable sources.

The generation of electricity with renewableenergy sources replaces the production with

fossil fuels such as coal, oil and natural gas;this allows Spain to reduce its imports of thesecommodities signi cantly.

Evolution of SO2 emissions avoided by renewable energy useFIGURE 68



84

According to the estimations:

The generation of electricity with renewableenergies avoided fossil fuel imports equivalentof 12.6 million tons of oil in 2010 .

For 2020 this gure will exceed 24.5 million toe .

In € (real based for 2010), this translates intosavings of 2,302.2 million € (16) for the year

2010, approximately 0.22% of Spain’s GDP in2010 . The cumulative savings for the period2005-2010 amounts to 11,168.3 million € (constant base 2010).

Prices of fossil fuels: coal (70.13 € / ton), Fuel ( € 60.19 / barrel Brent), Natural Gas (5.23 € / MMBtu).

16

Evolution of the substitution of fossil fuel imports (tons of oil equivalent)FIGURE 69




85


Environmentalimpact and of energydependence of biofuelsIn 2010, according to CORES, gasolineconsumption reached 5.7 million tons whilediesel fuel consumption was of 23.6 milliontons. Meanwhile, the use of biofuels consistedof 0.4 million tonnes of bioethanol and 1.4million tons of biodiesel.

The use of biofuels in transport contributessigni cantly to reducing emissions ofgreenhouse gases. In 2010 emissions of morethan 3.8 million tons of CO2 equivalent wouldhave been avoided (17) .

In addition to reducing the emission ofgreenhouse gases, the use of biofuels also

produce other bene ts like the substitutionof oil imports for raw materials for themanufacturing and/or the import of biofuels.This has two positive aspects:

Diversi cation of energy supply inputs.

Reducing energy dependence of oil-producing countries characterized bypolitical, social and economic instability.

A higher penetration of biofuels in the marketas well as increased domestic production of thesame, would further contribute to reduce theexternal dependence and the negative effects thatsuch instability has on the volatility of oil prices.

Methodology and Sources: “Energy and greenhouse gas emission savings of biofuels in Spain’s transport fuel.The adoption of the EU policy on biofuels”, CIEMAT; CORES.

17

CO2 emissions avoided by the use of biofuels in transportFIGURE 70



86

Estimation of the substitution of fossil fuels by biofuels in transportFIGURE 71




87


Relation between Spain’s GDP and primary energy consumptionFIGURE 72

Evaluation of the riskderived from the lack of fossil fuels

One of the key objectives of energy policy isto reduce the energy dependence of Spain,because of the risk it poses for the properfunctioning of the economy . The loss of arelevant volume of supply of one of the energyinputs during a certain period of time wouldhave negative consequences for the economicactivity.

Although the situation does not occurfrequently, in the political and trade disputes

which have been occurred so far should be analarm signal to prompt the search for formulaswhich allow mitigating the risk derived from thescarceness of fossil fuels in Spain.

In this context, a simulation was performed toquantify the negative impact on the Spanisheconomy . The simulation accounts for differentscenarios of cuts in natural gas supply, whichis the principal fossil fuel used for electricitygeneration in Spain.



88

Even though Spain imports the natural gasthat it consumes from more than 10 differentcountries; however 32.1% of this amount camefrom just one country in 2010, approximately131,850 GWh or more than 11 million toe.

In the exercise carried out, the impact of asupply cut of 1, 10 and 20 days is simulatedand estimated the number of days that

would entail a loss of 1% of GDP. To dothis, a calculation was made of the existentrelationship between the GDP and consumptionof primary energy of Spain’s economy.

A 20 days cut on the supply from Spain’s maingas provider would amount to a loss of 5,000million € , approximately 0.5% of the GDP. Theloss of supply of natural gas from this countryfor a period of 43 days would cause a reductionof 1% of Spain’s GDP .

Although not very likely, the situationdescribed hereinbefore can occur, sincesome of our natural gas and crude oil supply

countries are characterized by unstablesociopolitical situations. Additionally, technicalproblems related to the supply can also be acause of a supply cut.

The following facts should be taken intoaccount :

Spain’s energy dependence on primary

energy of third countries reaches 74.0%when considering nuclear energy as adomestic energy source (methodologyused by the Ministry of Industry, Tourismand Trade) and 88.6% if only consideringrenewable energies as such.

In comparison to third countries, the energyintensity of the Spanish GDP is relativelyhigh, about 0.12 toe per thousand euros.

Spain imports almost all of their consumptionof oil and natural gas from countries withparticular geopolitical situations jeopardizingthe security of supply of these fuels.


Simulation of the impact on Spain’s GDP if the main natural gas supplier cuts off its supplyFIGURE 73



89


Structure of Spain’s natural gas imports by countries

Structure of Spain’s oil imports by countries

FIGURE 75

FIGURE 74



7



91


Renewable energiesincentives resulting fromelectricity generation

Comparing the results of the savings derived from avoiding

CO2 emissions and from replacing fossil fuel imports theremunerations received by the sector as an incentive forits development, there is a positive balance for the years of2005-2008 and a negative balance for 2009 and 2010.

Comparison between the economic impact derived from avoided CO2 emissions andreduction in energy dependence, and of the incentives received by the RenewableEnergy Sector (18)

FIGURE 76

Source: Comisión Nacional de Energía (National Energy Regulator)

18



92

Renewable energies incentives resulting from electricity generation

In 2010 the difference resulting from thegains generated by renewable energies

(avoiding CO2 emissions and reducing theenergy dependence) and the incentivesreceived by the sector, was of 2,572.6 million€ , as a consequence of the strong increaseobtained feed-in tariffs between 2008 and2010. This increase was mainly due to theamounts paid to the concentrated solar powerand to photovoltaic energy, the latter being

the energy that received the highest amountof remunerations in the past two years.

The breakdown of the feed-in tariff obtained bythe different technologies of the sector is shownin the following gure for the period 2005–2010.

Additionally, the evolution of the contributionto the GDP was quanti ed for the differenttechnologies receiving incentives.

Breakdown of incentives received by the different renewable technologiesFIGURE 77



93


GDP contribution of renewable energies / amounts of incentives receivedFIGURE 78



8



95


The existence of units of renewable generationfrom the special regime that act as pricetakers in the electricity wholesale market and

whose marginal cost of generation cost isinferior to the units of fossil fuels, leads to alower marginal price in the market than theone that would exist in the absence of suchtechnologies. Renewable energies substituteunits of conventional generation with a highmarginal cost that would x higher marginalprices in the market .

Since the price of all the electricity is paidtaking the price of the last MWh matched inthe market (this is, the highest price), theavailability of renewable energies, which offerthe energy at zero price level, implies the xingof lower marginal prices.

Herein below we present an evaluation of theimpact these effects have in the total cost ofenergy in the intraday OMEL’s Daily Market.

Comparison of the hourly dispatch provided byOMEL on the daily market in which renewableenergies are included (wind, photovoltaic,concentrated solar power and biomass) withone in which such technologies would havenot been taken into account, for the period2005-2010 .

The result obtained from this analysis is areduction of the acquisition cost of energyderived from the lower marginal market priceof electricity as a result of the existenceof renewable energies. This amounted to acheapening of 4847.6 million € in 2010(21.92 € per MWh acquired in the market) .

Economic Impact in thewholesale electricity marketderived from renewableenergies belonging to the

special regimeTe renewable energies under the special regime reduce thecost of energy in the daily market of OMEL.



96

Economic Impact in the wholesale electricity market derivedfrom renewable energies belonging to the special regime

This comparison has been made replacing the renewable energies taken into account in each timeframe by the following offers made

by generation units in OMEL and the mechanism established in 2006 to avoid that the cost of CO2 emission allowances is transferredto all the energy negotiated in the market (“minoración de CO2”). Being the daily market, it does not include the effect of the capacityguarantee nor of technical constraints.

19

Methodology applied to compare the match schedule in the Daily Market with and withoutrenewable energies (19)

FIGURE 79



97


Bene t derived from the penetration of renewable energies in the Daily Market: savings

in the cost of energy in the wholesale market per MWh

Cost savings in the OMEL Daily Market due to the penetration of renewable energies

FIGURE 81

FIGURE 80



9



99


Speci cally, the following analyses have beencarried out:

Comparison between the annual tariff de cit / surplus and the net savings derived fromrenewable energies (20) .

Comparison between the evolution of theaccumulated tariff de cit / surplus and the

accumulated net savings since 2005 resultingfrom the penetration of renewable energies.

In accumulated terms, in 2010 the tarif ngde cit amounted to 24,582 billion of € ,whereas the net savings accumulated in thesystem derived from the existence of renewableenergies during the period 2005-2010 was of9,173 million of € .

Te electricity tari de citand the saving provided byrenewable energies in the

Spanish electricity market As presented in the previous section, there is a lowering in thecost of the acquisition of energy in the wholesale market arisingfrom the existence of renewable energies. In this section ofthe report this saving has been compared with the equivalentpremium that the promoters of these facilities receive and withthe evolution of the tari de cit.

Difference between the savings produced in the Daily Market of OMEL arising from the existence of renewable energies and theequivalent premium received by the agents of the special regime for renewable energies.

20



101


Accumulated tariff de cit vs. accumulated net savings due to reduction of prices

in the electricity market

FIGURE 83



10



103


Te cost of electricitysupply in SpainTe impact of the tari s and premiums received by renewableenergies in the electricity tari de cit has been subject ofstrong controversy in public. In order to assess the realimpact, the evolution of the main components of the cost ofelectricity in Spain in recent years have been studied accordingto information published by the National Energy Regulator(Commission Nacional de Energía, CNE) and the results of theSpanish electricity market.

From the study of the data contained in thetables above can be inferred:

1. The payments for the electricity generated,being the sum of payments made to the

ordinary regime and the special regime, grewduring the period 2005-2010 at an annualaverage of 3.9%, a lower growth than the totalcosts for the supply of electricity, which grewby 4.6% .

2. The growth of the payments for theelectricity generated has been much lowerthan the price development of fossil fuels: abarrel of oil has increased by 42.6%, naturalgas by 28.6% and imported coal by 52%,while the cost paid for electricity decreased by4.4% in € / MWh.

3. Among the reasons explaining the modestincrease of the component of the paymentsmade by the electricity generated are:

A relatively low growth of demand in thisperiod regarding the increase of installedpower: 5.8% throughout the period,compared with an increase in installedcapacity of 34.1% in the same period.

Broken down by generation technologies, theinstalled capacity of combined cycle naturalgas plants was the one that increased mostduring the period 2005-2010 , 13,389MW, followed by 10,275 MW of wind powercapacity and other renewables (mainly solarphotovoltaic and concentrated solar power),4,517 MW.



104

Breakdown of the major energy costs (million of constant € base 2010) (22)FIGURE 84

Payments for electricity includes the following: Adjustments regarding income – revision mainland and islands generation, adjustments regar-ding income - mainland and islands generation before 2003, adjustments regarding income - mainland and islands - January 2001 - Decem-ber 2005, revision islands generation, additional cost-island generation (Article 18.1 RD 1747/2003), viability plan of Elcogas, SA, temporaryadjustments regarding income of the de cit of income foreseen for 2009, incentive for the use of indigenous coal, system of interruptibility inthe market, imputation of the difference of losses, de cit (+) or surplus (-) of system of capacity payments, settlement balance DT11, compen-sations DT11 RE, stock of coal, coal premium for coal according to Ministerial Order 21 / 11/2000, coal premium.

Other speci c costs / fees includes: CTC fee, nuclear moratorium (on the regulated incomes), fund for the nancing of activities of the GeneralRadioactive Waste Plan, fee for basic stock of uranium, fee for the 2nd part of the nuclear fuel cycle, costs of compensation for interruptibilityand special regime, surcharge to recover the de cit of incomes generated in 2005.

Costs associated to the de cit includes: Adjustments regarding income prior to 2003, 2006, 2007, 2008, 2009, 2010, awarders 2nd auctionde cit ex-ante, temporary imbalances of income in the income de cit for 2009, settlement balance DT11, compensations DT11 RE.

Other costs includes: Quality of service, demand side management, 2008-2012 Action Plan of the Strategy of Savings and Energy Ef ciency inSpain, Strategy of Savings and Energy Ef ciency in Spain 2004-2012.

Sources:- Annual reports of the Spanish electricity system published by the Spanish Transmission System operator (TSO) (Red Eléctrica de España).

- Statistical Information regarding Energy Sales in the Special Regime published by the Natioanl Energy Regulator (Comisión Nacional deEnergía).

- Rest of costs: Reports of the National Energy Regulator (Comisión Nacional de Energía) on the results of the provisional clearance andoractised veri cations.

- These data are expressed in constants € of 2010 using the de ator of the GDP that publishes the National Institute of Statistics.

22

Te cost of electricity supply in Spain



105


Annual increase, increase over the period and average increase of the different costsFIGURE 85



106


Despite the growth of the amounts paidin premiums to renewables, these have a

reducing effect on the electricity marketprices . Renewable energies displacegeneration units with higher productioncosts, transmitting this effect to the entireenergy matched in the market (not includingthe effect of the capacity guarantee nortechnical constraints).

In the analysed period, 2005-2010, in theyears 2009 and 2010 the premiums werehigher than the savings. In the rest of thescal years the premiums were inferior tothe savings in the cost of acquisition of theenergy in the Daily Market of OMEL due tothe penetration of the renewable energies:that is, during the period 2005-2008 thepremiums were compensated by the savingsthat were generated in the pool.

Additionally, payments for electricitygenerated in Spain have had smaller

uctuations than fossil fuel prices : areduced dependence from these fuelsmeans a relevant reduction of the volatilityof the prices.

4. During the period 2005-2010, the relativeimportance of the payments made by theelectricity generated has declined in relativeterms with respect to the total electricity supplycosts in Spain : decreased from 71.2% in 2005to 63.0% in 2010.

Therefore during the period, the growth of therelative weight of the payments made for thegenerated electricity has been lower as thegrowth of the rest of the cost of the supply ofelectricity in Spain.



108


Cumulative growth of installed capacity vs. electricity demand

Comparison between the evolution of the price index of fossil fuels and the paymentsfor the generated electricity

FIGURE 88

FIGURE 87



109


Relative weight of energy costs compared to total system cost

Installed capacity of Coal, Combined Cycles (Natural Gas), Wind Power and OtherRenewable Energies of the Special Regime. Source: Spanish Transmission System Operator(Red Eléctrica de España) and National Energy Regulator (Comisión Nacional de Energía)

FIGURE 90

FIGURE 89



11



111


Adjustment services (23)

Are those services necessary to ensurepower supply in terms of quality, reliabilityand security. Adjustment services may bemandatory or optional. Adjustment servicesare understood to match the resolution oftechnical constraints, ancillary services andthe management of deviations.

Capacity paymentPayment provided to support the service ofpower capacity in the medium and long termoffered by the generation facilities to theelectrical system.

Comparison betweenthe evolution of historical cost of adjustment

services, capacity paymentsand losses in the system,and the level of penetrationof renewable energy

De nitions: Red Eléctrica de España (“The Spanish Electrical System in 2009”)23



112

Comparison between the evolution of historical cost of adjustment services, capacitypayments and losses in the system, and the level of penetration of renewable energy

Evolution of the components of the average nal price in the electricity market ( € / MWh)FIGURE 91



113


In the annual reports of the SpanishTransmission System Operator (Red Eléctrica

de España) on the Spanish electrical systemthe costs committed for adjustment services

and for capacity payments are published. Fromthis information a comparison has been carried

out between the evolution of such costs and thedevelopment of renewable energy penetration.

Comparison between the evolution of electricity production from renewable energiesand evolution of the percentage they represent with respect to the total cost, adjustmentservices and capacity payment. Source: Spanish Transmission System Operator (Red

Eléctrica de España) and National Energy Regulator (Comisión Nacional de Energía)

FIGURE 92



114

Comparison between the evolution of historical cost of adjustment services, capacitypayments and losses in the system, and the level of penetration of renewable energy

Evolution of the percentage adjustment services represent with respect to the total cost.Source: Spanish Transmission System Operator (Red Eléctrica de España)

Evolution of the percentage capacity payment represents with respect to the total cost.

Source: Spanish Transmission System Operator (Red Eléctrica de España)

FIGURE 93

FIGURE 94



115


Loss coef cients as a percentage of the energy and penetration of renewable energiesin the system.

FIGURE 95

From the comparison carried out it can beinferred that the cost resulting from adjustment

services and capacity payment has not increasedrelevantly even though during the period2004-2010 the volume of renewable energyin the system has doubled. On the other hand,it is important to note that during this period,with signi cant increases in renewable energypenetration, in some cases the percentage thatthese costs represent has come down whereas inother cases it has been increased.

Additionally, it contrasts the fact that the losscoef cients set (24) as a percentage of energy

consumed for different levels of consumptionhave not been modi ed during the period2004-2010, while the penetration of renewableenergy (in terms of power generation) hasincreased more than 2.2 times.

Loss factors to transfer the energy supplied to consumers

24



117


These infrastructural improvements are paid forby the project developers of renewable energies,but those installations that form part of the gridsystem are passed over to the grid operator.

In order to evaluate the economical impact ofthe efforts carried out by the renewable energysector in these installations , the following hasbeen done:

E orts of developersof renewable energy

to connect theirinstallations to the gridTe process of getting a facility for the generation ofelectricity from renewable sources operational requiresa series of investments in order to connect this facilitywith the electricity production grid. Te grid connectionis accomplished through a series of infrastructures whichallow the evacuation of the produced electricity throughthe grid and which additionally, in many cases contribute toimprove the reliability and security of the electricity system(strengthening of the system, meshing, ...).



118

The identi cation of a representative sampleof the efforts taken by renewable energy

project developers in the eld of wind,photovoltaic, biomass and concentrated solarpower for grid connections in the years from2002 until 2010.

Quanti cation of these efforts in economicterms: the ratio of these connections in termsof investment volume for the amount ofconnected capacity was obtained in € per MW.

These results were extrapolated to the entirecapacity connected to the grid between 2002and 2010.

In this quanti cation wind, photovoltaic,biomass and concentrated solar powerinstallations for the total volume of 6,654MW were analyzed. According to the dataof the Spanish Energy Regulator (Comisión

Nacional de Energía), the total volume ofinstalled capacity for the revised period,

between January 1st 2002 until December31st 2010 has been of 21,000 MW, ofwhich 16,141 MW was wind, 3,844 MWphotovoltaic, 483 MW biomass, and 532 MWconcentrated solar power.

The sample used to calculate the totalinvestment represented 33.9%, 29.0%, 15.8%and 18.8% of the total capacity installed inrespectively wind, photovoltaic, biomass andconcentrated solar power.

As a result of these calculations, the followingdata were obtained with regard to the totalinvestment in infrastructures per MW:

The results were extrapolated to the entireinstalled capacity in the sample period, theresulting investment is shown below:

E orts of developers of renewable energy to connect their installations to the grid

Investment cost / MW by technologyFIGURE 96



119


The results show that the wind energy sectorhas invested 63,238.0 € /MW in infrastructures

for grid connection. If this gure is extrapolatedto the more than 16.1 GW of installed windpower capacity during the period betweenJanuary 2002 and December 2010, theinvestment of the wind project developerswould have been of 1,020.7 million € .

The amount contributed by market parties whoinvested in photovoltaic installations was of108,637 € /MW: the total amount for 3,844 MWof installed power thus was of 417.6 million € .

In the same line of signi cance the totalinvestment of the biomass sector in grid

connections has been of 60,501 € /MW: thismeans that the total of 483 MW that have been

connected to the grid spent 29.2 million € forconnection costs.

The quantities paid by the concentrated solarpower sector sum to 69,561 € /MW: calculatedfor the entire volume of 532 MW of installedpower by the end of 2010, the investment hasbeen of 37.0 million € for grid connections.

Subsequently, the total estimation of theamounts contributed by renewable energiesproject developers to connect their installationsto the grid has been of 1,504.5 million € (period 2002-2010).

Estimated investment in grid connection infrastructuresFIGURE 97



13



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Combining the previous data with thegeneration of energy with fossil fuels replacedby renewable energies, it is possible to obtain

the impact on Spain’s population.

According to the previous evaluation, in 2010renewable energies would have been avoidedthe loss of 1,091,558 days of life.

182.681 days due to SO2 emissions avoided.

908.877 days due to NOx emissions avoided.

Additionally, analyses have been madeevaluating the impact in health expensesderived from the emission of these gases (26) .

Departing from these studies and from thegeneration of energy that comes from fossilfuels that is replaced by renewable energies,the value in € of the health expenditure avoidedin Spain has been calculated: If combining thereduction of NOx and SO2 emissions in theyear 2010 a health expenditure of nearly 160.5million € was avoided.

Impact onhuman health

According to di erent studies carried out concerning

externalities and energy policy (25)

, based on estimations ofemissions from large electricity plants that run on fossil fuelsin the U.S., a relationship has been established between theemissions of sulfur dioxide (SO2) and nitrates (NOx) and lossof days of human life.

Source: Externalities and Energy Policy: The Life Cycle Analysis Approach (OECD, November 2001)

Source: Economic evaluation of the Environmental Impacts from Electricity Production (UAH, IDAE).

25

26



122

Impact on human health

Days of life lost per GWh produced with coal, fuel oil and combined cycle (natural gas)FIGURE 98



123


Health expenditures not incurred (in the absence of NOx or SO2 emitted) due to the

substitution of fossil fuels by renewable energies ( € )

Avoidable loss of days of life according to the assumptions used and the fossil fuelreplaced (2005-2010)

FIGURE 100

FIGURE 99



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Directive 2009/28/ECThe overall objectives set by the Directive2009/28/EC promote the use of renewables inenergy generation establishing a goal of 20%from renewable energies in the case of grossnal energy consumption in the EuropeanUnion (EU) and 10% in the case of energyconsumption in the transport sector by 2020.

Each Member State has its own target setas a starting point taking its share of energyfrom renewable energies in gross nal energyconsumption in 2005. In particular for Spainthis share is set at 20% for 2020. Below, thetargets for the rest of the Member States of theEuropean Union are shown:

Te energypolicy objectivesand renewable energies

Directive 2009/28/EC of the European Parliament and of theCouncil of 23 April 2009 and the SE Plan (European Strategic

Energy echnology Plan) mark the objectives of EU energypolicy and set the targets to be ful lled in the coming years.



126

Te energy policy objectives and renewable energies

Energy and Climate Change PackageFIGURE 101



127


National overall targets in gross nal energy consumption in 2020FIGURE 102



128

As can be observed, namely the target for Spaincoincides with the European objective: in 2020

20% of nal energy consumption has to comefrom renewables.

The Directive also provides exible mechanismsto achieve compliance with the objectives set:

Statistical transfer: a Member State may buyproduction from another Member State (forstatistical purposes) for compliance with theobjectives.

Joint projects: a Member State supportsconcrete projects of new renewablegeneration in another Member State (or aNon-EU-country if the energy is consumed inthe EU territory).

Joint support mechanisms: Several MemberStates may establish a common market ofgreen certi cates or a common regulatedtariff for electricity from renewable sources.

Today, Spain is world leader in sometechnologies in the eld of renewable energies.Therefore it is an important source of business

development which should be explored in theshort to medium term.

Te SE PlanThe SET-Plan presents the future energystrategy de ned by the European Union.The SET Plan aims to make clean energies(“Low Carbon Technologies”) a viable andcompetitive alternative.

Given the general global scenario about climatechange, the SET-Plan highlights the need toestablish an effective policy regarding thereduction of emissions of greenhouse gases andimproving energy ef ciency.

To carry out this ambitious challenge,the SET-Plan proposes a transformationin the whole energy system that impliesprofound changes both for the source, andthe way energy is produced, transported,commercialised and used.

The programs established by the SET-Planto promote the development of key energy

technologies at European level are largescale projects. One such plan is structuredaround the European Industrial Initiatives(EII) that bring together industry, the scienti ccommunity, Member States, the Commissionand public-private partnerships.

The SET-Plan identi es six key technologieswhich should advance technologically and arede ned by the European Industrial Initiatives:

• Wind energy

• Bio-energy• Solar energy

• CO2 capture and storage (CCS)

• Electricity grids

• Sustainable nuclear ssion

Te Renewable EnergyPlan (PER 2005-2010)

and the draft of thePER 2011-2020End of 2010 was the deadline for achievingthe targets set in the Renewable Energy Planfor the period 2005 to 2010. As can beobserved in the following table, the objectivesof primary energy consumption from renewablesources and consumption of biofuels have notbeen achieved .

It is important to note that the situation

re ected in the table below shows whathappened in 2010, taking into account ahydropower production exceptionally superiorto an average hydrological year. Consideringmean values for the latter, the percentageof primary energy consumption supplied byrenewable energies would fall to 10.4%,increasing the differential with the 12% targetestablished in the Act of 27 November, of theelectricity sector. Likewise, the percentageof renewable energies in gross electricityconsumption would be 29.2% (27) .


Source: Draft of PER 2011-2020. Average year normalized according to the methodology of Directive 2009/28/EC.27



130


Evaluation of the degree of compliance with the objectives of installed capacity for 2010.

Source: National Energy Regulator (Comisión Nacional de Energía, CNE).

FIGURE 104

In this sense, the targets for primary energyconsumption supplied by renewable energies,

the share of renewable energies in grosselectricity consumption and consumption ofbiofuels have not been met. The only objectivethat has been ful lled has been the one of tonsof CO2 avoided.

As for the objectives set for each of thedifferent power generation technologies, the

situation at the end of 2010 is as follows:

As shown in the table above, wind energy andhydropower have not reached the goals setby a relatively small margin compared to the



131


Comparison of the targets set in the draft of the PER 2011-2020 withthose established in the NREAP 2011-2020FIGURE 105

installed capacity of biomass, which has beenmuch lower than planned in the draft PER2011-2020 . The low level of biomass in Spainis mainly due to the dif culty of the sector todevelop economically viable projects for therisks associated with this technology, for theavailability of raw materials and price volatility,

which has led to a very slow growth of thissector. The only technologies that have metthe targets for 2010 are both photovoltaic andconcentrated solar power .

With the expiration of the PER 2005-2010,it was decided to develop a new RenewableEnergy Plan with the time horizon 2011to 2020. The new PER 2011-2020 by theSpanish Government sets new energy scenariosand incorporates objectives in accordancewith Directive 2009/28/EC of the EuropeanParliament and of the Council of 23 April 2009on the promotion of the use of energy fromrenewable sources.

This plan reduces the technology targetsde ned by the Ministry of Industry, Tourism andTrade in the National Renewable Energy ActionPlan (NREAP), submitted to the EuropeanCommission in 2010.

Thus, as shown in the table above, in the

draft of the PER 2011-2020 the targets forsmall hydro power, biomass and onshore windhave been increased, and the targets for otherminority energies such as geothermal or tidalenergy remain the same. Instead, the targetsset for solar photovoltaic and concentratedsolar power and in a very signi cant way foroffshore wind energy have been reduced.

Also, the overall target set in the new PER is20.8% while in the NREAP a higher target of22.7% was set .

To achieve the targets of biomass, the newPER provides measures that focus on a



132

more ef cient use of biomass as well as ona simpli cation of the procedures for the

implementation of projects.

The onshore wind technology is expected toremain relatively stable, with improvements inthe resistance of the wind turbines, the qualityof the transmitted energy to the grid and lowerproduction costs. The objectives set for thistechnology are slightly above those establishedin the NREAP. In contrast, offshore wind targetshave been reduced, giving special importance tothe development of R & D for this technology inthe draft of the PER 2011-2020 but setting atarget not ambitious enough for 2020.

Regarding the development of solar photovoltaicenergy the PER expects an increase of this

technology in buildings, with a growth ofinstallations of medium and small capacity. The

plan also raises cost reduction measures in theproduction of energy with this technology aswell as the removal of economic barriers for abetter integration within the electrical system.As regards solar photovoltaic energy the PERalso highlights the need to encourage R &D for the production of components and thedevelopment of storage systems as well as thehybridization with other technologies.

In the last years it is found that the rate ofgrowth of renewable energies in Spain ingeneral has slowed down, evident partly inthe reduction of the targets in the draft of thePER 2011-2020 compared to the previouslyestablished ones. The decrease in the growth of




133


Comparison of the targets in the transport sector (ktoe) set in the draft of

the PER 2011-2020 with those established in the NREAP 2011-2020

FIGURE 106

renewable energies is mainly due to changes inthe regulatory framework, which have generated

uncertainty in the sector. Therefore, in orderto achieve the objectives in energy policy it isindispensable to establish a stable regulatoryand predictable framework, and which ensuresthe viability of investments.

With respect to renewable energies in transport,the draft of the PER 2011-2020 also reducesthe objectives previously de ned in the NREAP,as shown in the table below.

Particularly striking is the signi cant reduction(-26%) introduced regarding the target set for

biodiesel in 2020, while the goal of electricityfrom renewable energies in transport increasessubstantially (+43%). On the other hand,the objectives of bioethanol / bio-ETBE aremaintained and those of other technologieswhose contribution was marginal are eliminated.

Overall, the draft of the PER 2011-2020 proposesto lower the target of renewable in transport from13.6% as set in the NREAP to 11.3%.



15



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Conclusions

Relevance of theRenewable Energy Sector

The update of the Study of the MacroeconomicImpact of Renewable Energies in Spain forthe year 2010 certi es the importance ofthis sector in our economy . The activities ofthe different subsectors have placed Spain

as one of the references worldwide, and itseffects are very important both economicallyand socially. This growth has made that manyof the Spanish companies of the sector enjoya leadership position internationally and ourprofessionals are recognized for their highquali cations.

Over the past ve years, the contribution tothe GDP of the Renewable Energy Sectorexperienced positive growth rates. In 2010,the total contribution of the Sector amountedto ten billion euros, 0.94% of Spain’s GDP.The development of the sector has been very

important in all phases of the productionchain: promotion of projects, manufacturingof equipment and components, provisionof speci c services , ... These activity levelsallowed that during 2010 more than onehundred and eleven thousand direct andinduced jobs, are attributable to the RenewableEnergy Sector in our country.

On the other hand, the industry is a referencein terms of technological development sincethe amount spent on R + D + i in relation to itscontribution to GDP is much higher than theaverage of Spain.

Signi cant results have also been achievedin respect of emissions of greenhouse gasesavoided and fossil fuel imports replaced . Ithas been quanti ed that the cost savingsaccumulated for the period 2005-2010 derivedfrom these effects was of 2,484 million € andof 11.168 million € respectively, expressed inconstant terms (2010 basis).



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The study also shows that the growth ofpayments made for the electricity generated

have been below the average growth of the totalcosts related to the electricity supply and to theincrease in fossil fuel prices .

This has been the case for the following issues:

A relatively low growth of demand in this periodregarding to the increase in installed capacity.

The effect of reducing the electricity marketprice of renewable energies by displacinggeneration units with a higher productioncost, transmitting this effect to the entireenergy matched in the market.

Evolutionof the Sector in 2010

The year 2010 was a year with contradictoryresults . Although the contribution to GDPgrew, this trend was due to increased revenuesfrom energy sales and traders (not producers)of biofuels. By contrast, industrial activitiesexperienced a reduction in their volume ofactivity, an effect that was common to thesubsectors of wind energy, solar photovoltaic,biomass, small hydro and biofuels.

The decrease in income levels of industrialactivities deteriorated the competitive position

Conclusions



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of international companies. While the guresfor exports and foreign direct investment are

still very relevant, this position of privilegecould be seriously affected in the future if notreversed the trend in the Renewable EnergySector in the last two years.

In this context, the sector lost about vethousand jobs . The loss of these jobs arealmost entirely produced in the activities ofmanufacturing equipment and components,and speci c services. Among the causes thatexplain the changing trend in the RenewableEnergy Sector are the following:

The lack of a remuneration scheme for sometechnologies from 2013 onwards has addeduncertainty regarding the development ofprojects. The de nition of a stable andpredictable framework which also ensuresan adequate remuneration for investments isessential for the future of the sector.

The existence of administrative barriersregarding the authorization procedures,certi cation and licensing severely impedesdevelopment of new facilities , as stated

by Directive 2009/28/EC of the EuropeanParliament and Council of April 23, 2009,on the promotion of the use of energy fromrenewable sources. In this sense, thereare technologies in our country faced withthese barriers being obstacles very dif cultto overcome.

Restrictive trade practices of competitionused by other countries in the case of

biodiesel, which makes it impossible fordomestic factories to be able to compete onequal opportunities.

Looking to the future and concerning theful llment of the targets set in the draft of thePER 2011-2020, measures should be takenfocused towards improving the competitivenessof domestic enterprises and an orderly growthof all phases of the value chain:

The development of industrial approacheswhich include the promotion of facilities,equipment and component manufacturing,and the provision of specialized services ,these approaches allow the developmentof economic activity throughout the valuechain generating industrial knowledgeand employment. The wind energy andphotovoltaics at the time, were goodexamples of this in Spain.

Increased access to international marketswhere agents are emerging with verycompetitive cost structures : given the level of

technical excellence of our industry, it shouldspecialize in those activities with higheradded value, leaving those less relevant. Forthis it is crucial to make a signi cant effortin R + D + i.



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Index of guresFigure 1. Direct, induced and total contribution to Spain’s GDPof the Renewable Energy Sector (2005-2010) ...................................................................................................6

Figure 2. Direct and induced employment of the Renewable Energy Sector...................................................7

Figure 3. CO2 emissions equivalent avoided by renewable energy production ..............................................8

Figure 4. Evolution of the substitution of fossil fuel imports (tons of oil equivalent) ..................................9

Figure 5. Comparison between the economic impact derived from avoided CO2emissions and reduction in energy dependence, and of the feed-in tari s receivedby the Renewable Energy Sector ........................................................................................................................9

Figure 6. Annual depreciation due to the penetration of renewable energiesin the OMEL Daily Market .............................................................................................................................. 10

Figure 7. Comparison between the evolution of the price index of fossil fuelsand the payments for the generated electricity ............................................................................................. 11

Figure 8. Cumulative growth of installed capacity vs. electricity demand ................................................... 11

Figure 9. Installed capacity of Coal, Combined Cycles (Natural Gas), Wind Powerand Other Renewable Energies of the Special Regime.Source: Spanish ransmission System Operator (Red Eléctrica de España)and National Energy Regulator (Comisión Nacional de Energía) ................................................................. 13

Figure 10. Estimated investment in grid connection infrastructure (2002-2010) ...................................... 13

Figure 11. Installed capacity for electricity generation by technology of the special regime (MW) by the end of 2010.Source: National Energy Regulator (Comisión Nacional de Energía) ........................................................... 20

Figure 12. Penetration of biofuels in Spain in terms of energy content. Source: APPA .............................. 21

Figure 13. Direct contribution of the Renewable Energy Sector to Spain’s GDP (2005-2010) .................. 24

Figure 14. Growth rate of the Renewable Energy Sector in Spain (2005-2010) .......................................... 24

Figure 15. Relevance of the direct contribution to GDP of theRenewable Energy Sector with respect to GDP of Spain ............................................................................... 25

Figure 16. Direct contribution to GDP of the Renewable EnergySector (2005-2010) - million of current € ..................................................................................................... 26



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Figure 17. Direct contribution to GDP of the Renewable EnergySector (2005-2010) - million of constant € .................................................................................................... 27

Figure 18. Impact of the renewable energy sector in exports and imports,and net exports in the period 2006-2010 (million of constant € base 2010) .............................................. 28

Figure 19. Comparison between annual growth rates of Spain’s GDPand the contributions to GDP of the Energy and Renewable Energy Sector ............................................... 29

Figure 20. Direct contribution to GDP of the di erent technologies (million of current €) ...................... 30

Figure 21. Growth rate of the di erent technologies in constant terms ...................................................... 30

Figure 22. Fiscal impact of the Renewable Energy Sector in Spain .............................................................. 32

Figure 23. E ort in R + D + i with respect to GDP ......................................................................................... 33

Figure 24. Direct, induced and total contribution to Spain’s GDPof the Renewable Energy Sector (2005-2010) ............................................................................................... 34

Figure 25. Relevance of the Renewable Energy Sectorin terms of Spain’s GDP, period 2005-2010 .................................................................................................... 35

Figure 26. Percentage distribution of the contribution to Spain’s GDPsegmented by the di erent renewable technologies (2010) .......................................................................... 36

Figure 27. Direct and induced contribution to GDP - breakdown by technologies ..................................... 37

Figure 28. Contribution to the GDP of the Biofuels Sector ........................................................................... 38

Figure 29. Growth rates of the Biofuels Sector in real terms ........................................................................ 39

Figure 30. Direct and induced contribution to GDP by type of biofuel ........................................................ 40

Figure 31. Level of penetration of biofuels in Spain ...................................................................................... 40

Figure 32. Percentage of utilization of production capacity of biodiesel plants in Spain ........................... 42

Figure 33. Contribution to the GDP of the Biomass Sector .......................................................................... 43

Figure 34. Growth rates of the Biomass Sector ............................................................................................. 44

Figure 35. Evolution of installed capacity and energy sold of the Biomass Sector ...................................... 45



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Figure 78. GDP contribution of renewable energies / amounts of incentives received .............................. 93

Figure 79. Methodology applied to compare the match schedulein the Daily Market with and without renewable energies ........................................................................... 96

Figure 80. Cost savings in the OMEL Daily Market dueto the penetration of renewable energies ....................................................................................................... 97

Figure 81. Bene t derived from the penetration of renewable energiesin the Daily Market: savings in the cost of energy in the wholesale market per MWh ............................... 97

Figure 82. Annual tari de cit vs. net savings due

to reduction of prices in the electrical market ............................................................................................. 100

Figure 83. Accumulated tari de cit vs. accumulated net savingsdue to reduction of prices in the electricity market .................................................................................... 101

Figure 84. Breakdown of the major energy costs (million of constant € base 2010) ................................ 104

Figure 85. Annual increase, increase over the periodand average increase of the di erent costs .................................................................................................. 105

Figure 86. Electricity production broken down between renewable energyof the special regime and other technologies (2005-2010) ........................................................................ 107

Figure 87. Comparison between the evolution of the price index of fossil fuelsand the payments for the generated electricity . .......................................................................................... 108

Figure 88. Cumulative growth of installed capacity vs. electricity demand .............................................. 108

Figure 89. Installed capacity of Coal, Combined Cycles (Natural Gas),Wind Power and Other Renewable Energies of the Special Regime.Source: Spanish ransmission System Operator (Red Eléctrica de España)and National Energy Regulator (Comisión Nacional de Energía) .............................................................. 109

Figure 90. Relative weight of energy costs compared to total system cost ................................................ 109

Figure 91. Evolution of the components of the average nal pricein the electricity market (€ / MWh) .............................................................................................................. 112

Figure 92. Comparison between the evolution of electricity productionfrom renewable energies and evolution of the percentage they representwith respect to the total cost, adjustment services and capacity payment.Source: Spanish ransmission System Operator (Red Eléctrica de España)and National Energy Regulator (Comisión Nacional de Energía) ............................................................... 113

Index of gures



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Figure 93. Evolution of the percentage adjustmentservices represent with respect to the total cost.Source: Spanish ransmission System Operator (Red Eléctrica de España) .............................................. 114

Figure 94. Evolution of the percentage capacity payment representswith respect to the total cost. Source: Spanish ransmission System Operator(Red Eléctrica de España) .............................................................................................................................. 114

Figure 95. Loss coe cients as a percentage of the energyand penetration of renewable energies in the system ................................................................................. 115

Figure 96. Investment cost / MW by technology ......................................................................................... 118

Figure 97. Estimated investment in grid connection infrastructures ........................................................ 119

Figure 98. Days of life lost per GWh produced with coal, fuel oiland combined cycle (natural gas) .................................................................................................................. 122

Figure 99. Avoidable loss of days of life according to the assumptions usedand the fossil fuel replaced (2005-2010) ....................................................................................................... 123

Figure 100. Health expenditures not incurred (in the absence of NOx or SO2 emitted)due to the substitution of fossil fuels by renewable energies (€) ................................................................ 123

Figure 101: Energy and Climate Change Package ........................................................................................ 126

Figure 102. National overall targets in gross nal energy consumption in 2020 ..................................... 127

Figure 103. Degree of ful llment of the renewable energy targets for 2010 ............................................. 129

Figure 104. Evaluation of the degree of compliancewith the objectives of installed capacity for 2010.Source: National Energy Regulator (Comisión Nacional de Energía, CNE) ............................................... 130

Figure 105. Comparison of the targets set in the draft of the PER 2011-2020with those established in the NREAP 2011-2020 ........................................................................................ 131

Figure 106. Comparison of targets in the transport sector (ktoe)set in the draft of the PER 2011-2020 with those established in the NREAP 2011-2020 ....................... 133

macroeconomic impact of res in spain-2010

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