The country is facing an energy crisis that is affecting the fuel market there particularly badly. However, Spain’s energy policy in the short and long term is to partially decouple from the exploitation of conventional raw materials and increase the share of RES in final energy consumption. Hydrogen will play an important role in Spain with more projects underway.
Like other European Union member states, Spain has been obliged to develop a strategic document that will guide the country’s current and future energy policy. The National Energy and Climate Plan (NECP) for Spain was published in January 2020. It outlines the key issues for Spain’s energy sector from 2021-2030 (in the short term) and until 2050 with a long-term perspective.
Spain’s energy policy assumptions for 2021-2030
By the end of the decade, Spain plans to:
1. reduce greenhouse gas emissions by 23% concerning levels
1990 levels,
2. increase the share of renewable energy sources to at least 74% of total electricity generation,
3. increase energy efficiency by 39.5%.
To this end, it is envisioned to increase the share of renewable energy sources and renewable gases (including hydrogen) in the power and heating sectors, strengthen electrification of the transportation sector, modernize current residential and commercial facilities to increase energy efficiency, and transform the industry by gradually shifting to its use of alternative fuels.
By 2050.
Spain’s actions remain tied to the EU’s long-term goal of achieving climate neutrality in 2050, with 100% of the energy mix and 97% of the country’s total energy mix to be RES energy, with a particular focus on solar and wind power, influenced by extremely favorable geographic conditions. This generates high pressure to seek opportunities for effective storage, to minimize the risk of grid instability.
The measures outlined in the 2050 strategy include a strong mobilization of investment in green technologies, a shift to sustainable mobility through electrification and the use of alternative fuels in transportation, increased sustainability efforts in the construction and agricultural sectors, and a reduction in the level of energy consumption. Importantly, the Energy and Climate Strategy emphasizes the use of renewable hydrogen only and does not include any public financial commitment for hydrogen produced using fossil fuels.
Hydrogen will help reduce emissions
The planned actions are driven by the need to reduce the level of emissions in the national economy. As recently as 2018. Spain generated 334.3 million tons of carbon dioxide equivalent per year. This is still a significant improvement (by 25%) over 2007 when the equivalent level hit a record 447.3 Mt. It is Spain’s energy sector that is the largest emitter of greenhouse gases, accounting for 76% of all emissions in 2018, followed by agriculture (12%), industrial processes (8%) and waste (4%).
Despite the decarbonization targets already achieved and the steady upward trend in the area of renewable energy development, Spain’s total energy mix remains dominated by conventional fuels. The current system is based on gas, oil, and, until recently, coal. The new system, with variable renewable generation, will require efficient forms of long-term energy storage.
It is intended to offset the growing risk of power outages resulting from the increase in the use of electronic equipment and the process of digitization of almost all areas of the economy and daily life. In addition to the aforementioned risks, Spain also sees high opportunities in the energy transition. The new system is expected to be more efficient thanks to the integration of end-use sectors with higher electrification, the use of waste heat, and harvested electricity to produce renewable gases, of which hydrogen is highlighted as the most important.
To this end, Spain plans to adapt current policies and the regulatory framework in place to date so that it can be widely used as a fuel, but also as an essential energy store. According to Spain’s hydrogen strategy, at least 4 GW of electrolyzer capacity is to be installed by the end of 2030 to produce the fuel, which will be used first for transportation, then energy and industry.
Spain’s energy policy in a time of crisis
Spain has been making significant and, in the view of some, misguided decisions on the direction of its energy transformation. Experts suggest that the government should undertake a revision of previously set goals and focus on decarbonizing the system in a way that does not endanger the security of the electricity supply, especially in the face of the current crisis.
The first and key task of the energy policy that has been pursued so far has been to move completely away from coal-fired sources. Another is to phase out nuclear power by progressively closing down four more reactors over the period 2027-2035 so that generating capacity is reduced by about 3.2 GWe by 2030 and to zero in 2035. Instead, the government is focusing on strengthening the share of natural gas, especially in the energy sector. As the data shows, natural gas-fired thermal power plants currently provide about one-third of Spain’s energy production and, according to government experts, will be crucial in balancing the energy system at a time when the share of variable renewables will gradually increase. To back up the direction, last week Spain rejected the European Commission’s proposal to member states to cut natural gas consumption by 15%, arguing that its government had not been consulted beforehand.
The current situation in the European energy market and the need to ensure energy security in the future is causing experts to recommend even more strongly than before that the targets set for 2020 be revisited. The IEA report notes that to achieve carbon neutrality, it is necessary to use the existing nuclear infrastructure, which they estimate to be particularly high in Spain (over 90% efficiency). Indeed, phasing out both coal and nuclear power would mean that it would be gas-fired power plants that would have to balance the system during the period of the transition, which at present may involve a significant risk of a shortage of raw materials (the main importer of gas to Spain remains the United States, but this year it was Russia that ranked second among suppliers for the first time). Diversification of energy sources and even more ambitious plans relating to the production and operation of renewable hydrogen are therefore recommended as key, and thus likely to stimulate further growth of the hydrogen technology market in Spain. This is borne out by the multimillion-dollar investments announced in recent months, such as the Puertollano green hydrogen plant, a large-scale hydrogen hub project with industrial uses being implemented by Iberdrola and Fertiberia.
