Shining a spotlight on Iberian renewable energy advances

As AMPYR Distributed Energy (ADE) prepares to head to Spain for Solar & Storage Live in Barcelona, Senior Investment Director Ben Cameron highlights some of the exciting policy and commercial initiatives happening across Iberia that make the region attractive for investors and could inspire increased access to cheaper renewable energy in the UK.

Putting renewable generation at or near the point of consumption is by far the cheapest and most efficient form of energy available. Today, technological progress, maturing funding models and supportive regulation can make onsite solar increasingly simple for businesses and communities, offering the potential to significantly reduce carbon emissions without resorting to subsidies.

Harnessing the potential of renewables to deliver lower cost energy, as well as increased security and energy resilience at a community level, is where Iberia excels. Indeed, Spain benefits from the highest solar irradiation in Europe, achieving 1,700 kWh/m² in its sunniest regions, such as Sevilla and Almería, compared to the European average of about 1,000 kWh/m².

As a result, between now and 2030, Spanish solar installed is set to increase by a projected CAGR of 28%. Much the same can be said for the wider Iberian region, with the popularity of PV also growing across Portugal (with the technology now responsible for 12% of total power generation), Andorra and Gibraltar.

The region’s perfect blend of positive regulatory and legislative conditions, combined with favourable operational, environmental and financial factors, has also seen a boom in the creation of collective self-consumption (CSC) and renewable energy communities (REC) – often collectively referred to as energy communities. Bringing together local residents and businesses to generate and share renewable energy, an energy community sees numerous consumers benefit from lower utility prices, lower emissions and greater energy independence.

Energy communities benefit from significantly reduced grid fees for sharing energy that is generated locally. For example, in Spain, consumers within 2km of a solar asset can join the energy community. The excess energy from the renewable generator is shared across the community. Local residents and businesses pay a significantly lower price for this local generation, compared to the price that they typically pay for energy supplied by the grid, while the investor receives a higher price than exporting surplus energy to the grid.

Spain’s National Energy and Climate Plan promotes the development of a national network of energy communities as an attractive opportunity to expand renewables capacity as they offer more efficient use of limited space in urban areas as well as lower investment costs per user and the ability to share technical, administrative and operational knowledge. The government has supported these efforts by streamlining approvals and providing training and capacity building. If emulated in the UK, community energy schemes at a business and residential level could prove game-changing when it comes to tackling local grid constraints and unlocking stranded projects.

Both Spain and Portugal are empowering communities with clear legal frameworks, where residents in flats, for example, can confidently sign up to shared rooftop solar schemes to reduce reliance on the grid and lower their energy bills, as well as selling back to the grid when surplus power is generated. Models such as these, which are now tried and tested, can inform the transformation of our own systems to take full advantage of the potential of renewable energy.

The system is not without its challenges though, with administrative barriers cited by the Climate Action Network as factors impacting on progress in residential community schemes.

But this isn’t just an opportunity isolated to the residential space. Commercial properties across Europe are also engaged in energy communities. Rather than simply harnessing self-generated green energy and exporting surplus, this sees sites encouraged to trade with neighbouring buildings that don’t have access to renewable energy generation capabilities.

From an economic perspective, local communities and businesses can share the benefits of low-cost renewable power. From an environmental perspective, it reduces pressure on centralised energy supply, instead creating low-carbon flexible community microgrids.

Europe’s journey towards a sustainable energy future has seen a gradual but consistent expansion of the distributed solar power generation market, influenced by increasing investment, technological advancement and government initiatives designed to transform the energy landscape.

For example, the EU Solar Energy Strategy, as part of the broader REPowerEU plan, has set an ambitious target to install more than 320GW of new solar PV capacity by 2025 and a staggering 600GW by 2030. This goal represents a significant leap from the 280GW of installed capacity recorded in 2023 and predicts a dramatic rise in annual installations.

The commercial and industrial (C&I) sector is growing in prominence too within this landscape, with expectations to add an additional 125GW by 2030. This substantial contribution underscores the sector’s vital role in shaping the future of Europe’s solar capacity. The rooftop solar market, particularly among C&I customers, has experienced remarkable growth, expanding by 54% during the past year alone.

Recognising the potential for energy communities to help achieve a more secure, affordable and cleaner energy system for Europe, the REPowerEU Plan put forward the shared political objective of achieving one energy community per municipality with a population of more than 10,000 by 2025. Under EU law, energy communities can take the form of any legal entity including an association, a cooperative, a partnership, a non-profit organisation or a limited liability company. Through the Clean energy for all Europeans package, adopted in 2019, the EU introduced the concept of energy communities in its legislation for the first time, notably as citizen energy communities and renewable energy communities. Since then, legislation on energy communities has been further strengthened by new or revised EU rules.

Spain stands out as a major European hotspot for solar PV, due to its proactive energy policies and competitiveness in both utility-scale and distributed generation. In 2023, Spain’s cumulative solar PV capacity surpassed 25GW. On September 24, 2024, the Spanish Government approved the update of the National Integrated Energy and Climate Plan (PNIEC 2023-30) through Decree 986/2024, with ambitious plans to reach more than 76GW of solar PV by 2030; this includes 19GW of decentralised solar PV, up from 7GW in 2023.

The growth of the distributed generation solar market has been fuelled by government support. In June 2021, Spain’s Royal Decree 477/2021 allocated €450 million in grants, distributed among three sectors: €200 million for residential, tertiary, and public administration; €150 million for industry and agriculture; and €100 million for the commercial sector.

Renewable power sources supplied a record 72% of Portugal’s electricity in the first 10 months of this year, up by 1.9% over the same period last year, or 2.3% when correcting for the effects of temperature and number of working days.

On October 1 2024, the Portuguese government released a revised version of the National Energy and Climate Plan 2030 (Plano Nacional de Energia e Clima para 2030 or PNEC). The updated strategy targets 86% of the country’s electricity to be renewable by 2025, increasing to 93% by 2030. The revised plan also aims for more than 20.8GW of operational solar PV systems by 2030, of which 5.7GW will be decentralised, reflecting CAGR of 20% from 2025 targets.

The Portuguese solar market’s most rapidly expanding segment is small-scale self-consumption installations, which have grown by over threefold in the past five years thanks to financial incentives enabling project owners to use electricity without paying grid taxes and levies, which is particularly advantageous for large energy consumers.

To encourage distributed production and self-consumption of energy from renewable sources, a new legal framework was created in Portugal that enables individual self-consumption; encourages energy communities; and supports the creation of renewable energy communities. The legal enshrinement of these figures allows citizens, companies, and other public and private entities to produce, consume, share, store and sell energy produced from renewable energy sources, thus actively participating in the energy transition.

With Spain and Portugal in our sights, we are seeing rapid growth of projects with ground mount schemes near industrial areas. After all, the irradiation of the Iberia region and the significant potential for distributed energy, as well as the favourable regulatory landscape, make the market a hugely attractive growth opportunity.

We are already working with developers and customers in the region to help fast track solar ambitions through strategic investments. The rules on CSCs and RECs provide us with a great opportunity to develop large schemes that provide the majority of their clean energy to the local community, whether it is commercial sites or residential consumers living in the neighbourhood. Such schemes are being embraced by industrial customers as a way of accessing low cost renewable generation, and by local communities who can share these benefits. We are excited to start bringing some of these projects to market, helping Portugal and Spain deliver on their ambitious net zero targets.

The phenomenal growth of distributed energy across Iberia coupled with the region’s commitment to robust targets for solar adoption over the next decade are powerful indicators of the potential of renewables to delivery substantial benefits not just for the environment, but for energy resilience, cost savings and the bottom line.

Events like Solar & Storage Live put our expert team at the heart of conversations around the latest ideas, initiatives and innovations that will drive projects forward. Through our involvement in projects in Spain and Portugal, we can harness the opportunity to bring ideas and the best practice from the region to guide solar innovation and adoption in the UK now and in the future.