AleaSoft Energy Forecasting, December 13, 2024. In the 50th edition of AleaSoft Energy Forecasting’s monthly webinars, coinciding with the company’s 25th anniversary, experts from PwC Spain, Deloitte, EY and AleaSoft discussed the advances in renewable energy, the rise of batteries and the challenges of the energy transition in the next five years. Spain is a leader in renewable energy, but it faces challenges such as price cannibalisation and the need for investment in grids and interconnections for a sustainable future.
The 50th edition of the monthly webinar series organised by AleaSoft Energy Forecasting coincided with the celebration of five years since the first webinar in December 2019 and the company’s 25th anniversary. For this special occasion, there was the participation of experts in the energy sector from the world’s leading firms in the consulting and auditing sector. Oscar Barrero Gil, Partner responsible for the Energy Sector at PwC Spain, Carlos Milans del Bosch, Partner of Transactions, Energy Sector at Deloitte, Antonio Hernández García, Partner of Regulated Sectors at EY, Oriol Saltó i Bauzà, Associate Partner at AleaSoft, and, as moderator, Antonio Delgado Rigal, CEO of AleaSoft, participated in the webinar. The event evaluated the progress achieved and projected the challenges the sector will face in the next five years. With a retrospective and prospective vision, the experts emphasised how the past five years have been transformative for renewable energies and how batteries promise to lead the energy revolution in the coming years.
The last five years: solid growth and learned lessons
In the last five years, renewable energies in Spain have grown significantly, consolidating the country as a European leader in this field. Photovoltaic capacity has multiplied exponentially, while wind energy has also advanced, albeit at a more moderate pace. This progress has placed Spain as a benchmark on the continent, both in terms of renewable energy generation and in the development of PPA (Power Purchase Agreements).
The past five‑year period was also marked by three major crises that tested the resilience of the energy system. In 2020, the COVID‑19 pandemic led to a collapse in electricity demand, while in 2022, the invasion of Ukraine triggered an unprecedented crisis in energy prices. Finally, in 2024, the electricity market faced negative prices for the first time in Spain and a spring with very low prices, a phenomenon that made it clear that a turning point in the energy transition is necessary. Despite these bumps, Spain managed to integrate over 25 GW of additional renewable capacity and maintain more competitive energy prices than many European countries.
However, the speakers also highlighted several challenges that have limited the sector’s potential. Among them, price cannibalisation in the wholesale market and an increase in renewable energy curtailments, although they stressed that this is not currently a critical problem affecting most renewable energy installations as, in 2024, energy curtailments have remained at 2%, a challenge in an electricity mix with more than 50% share of renewable energy.
The next five years in the energy transition
The immediate future of the energy transition has a clear protagonist: batteries. These technologies will be essential to address one of the biggest challenges of the electricity system, the need for energy storage. Batteries will allow managing the intermittency of renewable energies, ensuring the system stability and optimising the use of resources. During the webinar, it was highlighted that battery costs have decreased by 86% in the last decade and that projections indicate that the return on investment is becoming attractive. According to the experts, falling costs and a clear need for storage capacity in the electricity system augur an accelerated growth of batteries in the coming years.
In parallel, a significant increase in electricity demand is expected, driven by the electrification of sectors such as transport, industry and heating. Data centres will also play a crucial role, as they need renewable energy to meet their sustainability commitments. Spain, with its competitive prices and renewable capacity, is in a privileged position to attract international investments in this sector.
Another key aspect will be the improvement of electricity grids and international interconnections. The Iberian Peninsula remains an energy island, which limits energy exports and imports. The experts pointed out that annual investments of 4.3 billion euros are necessary to modernise and expand the grids, thus allowing for efficient integration of renewable energies and the decarbonisation of all sectors.
The webinar also underlined the importance of hybridisation. Hybrid plants, which combine renewable technologies with storage, will be essential to manage intermittent production and improve the profitability of investments by avoiding price cannibalisation and energy curtailments.
Finally, the speakers called for the need for regulatory stability. A clear and predictable regulatory framework will be essential to attract the necessary investments and ensure the success of the energy transition. The role of capacity markets was highlighted, which will enable the profitability of technologies such as batteries and their integration into the system while ensuring its long‑term stability.
Optimism and action
The webinar concluded with a message of optimism: the energy transition is unstoppable, but it requires coordinated actions and a collective commitment. The next five years will be decisive to consolidate Spain’s leadership in renewable energies and lay the foundations for a sustainable and competitive electricity system. Collaboration between the public and private sectors, as well as the development of solid demand, sufficient storage capacity and modern infrastructure, will be key to achieve this goal.
AleaSoft Energy Forecasting’s analysis on the prospects for energy markets in Europe and renewable energy project financing
The next webinar in the series will be the first webinar of the year 2025. PwC Spain will participate in the webinar again to analyse the evolution of European energy markets and the prospects from 2025 onwards, the prospects for energy storage and hybridisation, the industry electrification, the current state of regulation on PPA and renewable energy and virtual PPA and FPA (Flexibility Purchase Agreements).
Source: AleaSoft Energy Forecasting
