Boston, MA -- (ReleaseWire) -- 10/23/2012 -- BMI View: A question mark continues to hang over Spain's renewable energy sector, following the government's decision to withdraw renewable energy subsidies in January 2012. The government has given no indication as to whether or not it plans to lift this moratorium, but in the meantime investors are looking elsewhere. In other developments, the government's decision to request an economic bailout package for Spain's cash-strapped banks will have implications for the power sector. Many of the troubled, regional banks requiring additional funds are shareholders in energy firms and the terms of the European bailout will almost certainly include demands that the banks sell these shares. In the short-term at least, Spain's economic outlook is bleak.
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Spain has a varied energy mix, tapping into thermal, nuclear, hydroelectric and renewable sources of power, thereby reducing the country's dependence on one source of electricity. Thermal resources play, and will continue to play, a key role in Spain's generating capacity - developments include Iberdrola's decision to close its 215 megawatt (MW) coal-fired power plant in Pasajes in June 2012. Renewable energy sources continue to post strong levels of growth, with new projects announced; however, the removal of subsidies for renewable energy projects will lead to a slowdown in the sector.
During the 2012-2021 period, Spain's overall power generation is expected to increase by an annual average of 0.8% to reach 305.4TWh. Driving this growth is an annual 3.2% gain in gas-fired generation and a 5.2% annual rise in non-hydro renewables-based electricity supply. The use of coal and oil in power generation is expected to decline steadily, countered by modest gains in nuclear power and hydropower.
Following an estimated increase in real GDP of 0.7% for 2011, BMI forecasts average annual growth of 1.1% between 2012 and 2021. The population is expected to rise from an estimated 46.5mn in 2011 to 48.9mn by end-2021, and net power consumption looks set to increase from an estimated 259.7TWh in 2011 to 296.9TWh by end-2021. During the 2012-2021 period, the average annual growth rate for electricity demand is forecast to be 1.4%. The country's theoretical net export capability by 2016 is estimated at 11.3TWh, which we see reversing over the second half of the forecast period to see Spain requiring imports of 5.9TWh.
The key trends and developments in the Spanish electricity market are:
- In presenting the government's budget in late March 2012, Spain's Prime Minister Mariano Rajoy made no indication as to when the authorities plan to lift the moratorium on renewable energy subsidies, which were halted in January 2012.
- As part of the European bailout package for Spanish banks, many will be obliged to sell their assets in leading national firms, such as Repsol and Iberdrola.
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