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Spain rises to number 8 among the most attractive countries to invest in renewable energies

investing in renewable energies

Spain is once again positioned among the top 10 positions worldwide in the PPA ranking as one of the most attractive markets for the closing of this type of agreements. This appears in the Renawable Energy Country Attractiveness Index (RECAI) report, where Spain appears among countries such as the United States, which tops the list, China and Germany. Do you want to know more about what makes Spain so attractive for investing in renewable energies? Then this article is for you!

What are PPPs and why has Spain repeated as the most attractive country in this category?

The big news is that Spain has climbed one place compared to the May edition of RECAI and appears, in the overall ranking, as the eighth most attractive market in the world for those seeking to invest in renewable energies.

However, when it comes to PPAs, Spain is once again the most attractive country in the world. But what are PPAs?

You see, Power Purchase Agreements (PPAs) are known as long-term bilateral electricity supply contracts with a fixed price. Price, which must be much lower than the one you get in the wholesale market.

As an example, one of the parties (the producer, a wind or solar farm) undertakes to supply electricity at a specific price for 10 or more years to its customer (which may be an electricity-intensive industry or a multinational in any sector, etc.).

Many developers of photovoltaic or wind farms carry out their activity by projecting a farm, looking for a buyer for the electricity they will produce. Once they have found a buyer, they can approach a bank and more easily obtain financing for the project.

Now, what is happening with Spain, which has once again repeated its debut as the most attractive country for PPAs? Well, it has multiple resources, experienced promoters and a stable and quite attractive political-economic scenario in its favor.

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Spain rises to eighth place as the most attractive country to invest in renewable energies

Spain continues to climb positions in the top 10 of the most attractive countries for investment in renewable energy, ranking eighth. This 60th edition of RECAI shows that governments around the world are working on renewable energy programs to reduce their dependence on imported energy. This is due to ongoing geopolitical tensions and economic uncertainty.

This index ranks the world’s top 40 markets according to their investment attractiveness and renewable energy deployment. It uses several criteria to compare attractiveness, such as the size of the development pipeline. The latter is the absolute size of the renewable energy investment opportunity that exists. The index therefore naturally ends up favoring countries with large economies.

Therefore, this new edition includes a new single normalized index, as it normalizes the GDP of each country. Thus, it shows the markets whose performance is above expectations for their GDP.

investing in renewable energies

Which other countries qualified alongside Spain?

Spain shares its place in the top 10 with the United States, which retains its position due to the Inflation Reduction Act, passed in August 2022. In second place, China remains committed to accelerating its transition to renewable energy, as it seeks to peak its emissions by 2030 and achieve net zero emissions by 2060.

Germany, on the other hand, climbed to third place with a great attraction to invest in renewable energies. This is thanks to its “Easter Package”, a commitment that is expected to triple its expansion in a decade.

The United Kingdom has lost the top spot in terms of installed offshore wind capacity this 2022 to China. Germany has stolen the spot, dropping it to fourth place globally. Nevertheless, the country has a large project pipeline where offshore wind energy features prominently.

In fifth place, it is followed by the Netherlands, which has entered the top 10 thanks to its ambitious clean energy agenda. The latter includes an offshore wind target of 70 GW by 2050. 

Other economies to highlight are Greece, which has had a very strong performance. This has been driven by new targets of 15 GW of new clean energy by 2030 and 2 GW of offshore wind in the same time period. 

Finally, and for the first time, Indonesia enters the top 40.

investing in renewable energies

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The first standardized ranking

The RECAI index uses different criteria to compare the attractiveness of different markets for investing in renewable energy. This latest edition includes a new single normalized index, as it “normalizes” the gross domestic product (GDP) of each country.

This being the case, the report highlights that, after a prolonged period of exponential growth, due to record power prices and current market volatility, the volume of power generation committed through corporate Power Purchase Agreements in 2022 will be lower than in 2021. However, it is expected to be much higher than in 2020.

Spain continues to be one of the main PPA markets and accounts for approximately one third of new PPA capacity in Europe so far. 

The energy transition is becoming increasingly urgent

EY’s partner responsible for the energy sector in Spain, Agustín Rico, says that the energy transition continues to be high on the agenda of many governments and companies. This makes it an even more urgent issue in light of the challenges of the global energy market.

For this reason, there is a need for greater deployment of renewable technologies, both electric and gas and eco-fuels, to ensure that energy demand is covered by indigenous entities. And, in addition, to minimize the negative impacts of international supply shocks on consumers and business competitiveness.

For his part, EY Consulting’s partner for regulated sectors, economic analysis and sustainability, Antonio Fernández, highlights the role played by PPAs in the market. These allow companies to “hedge against the volatility of price increases in the electricity market, as well as improve compliance with decarbonization and sustainability objectives through the purchase of green PPAs.”

The competitive advantage of renewable energies in Spain is what justifies the maturity of the PPA market. In terms of both the number of transactions and volume of transactions

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Are you considering investing in renewable energies and a market with a great attraction to make your business idea prosper? Spain can be your solution! As you will have seen, it has what it takes to guarantee stability and the necessary resources to carry out the activity. 

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