Who is he?
Luis Crespo (Madrid, 1952) is the Secretary-General of Protermosolar, Spanish Association of Thermoelectric Solar Industry, since February 2008. An Aeronautical Engineer, with a PhD in this same discipline, Crespo has dedicated a great part of his professional career to the renewable energy industry, running, among other organisms, the Advanced Technology Center for Renewable Energies of Andalucía. Since 2011 he is also president of ESTELA, the European Solar Thermal Electricity Association, from where he is trying to promote this technology in Europe.
Since 2012, the thermal solar power industry is going through a halt in Spain. Moratoriums imposed on renewable energies resulted in a disincentive to invest in new facilities, but Protermosolar defends the viability of this technology as an alternative to fossil fuels, highlighting, among other aspects, the manageability of the energy it produces.
What is the situation of the solar thermal power industry in Spain?
One thing is the industry and quite another are the power plants. The plants are operating perfectly. The truth is that we witness with pride companies that, although some power plants have been operating for three years, are capable to increase their production every year, and this year we beat the record for thermoelectric power generation with more than 5 terawatts/hour. Actually, plants run like clockwork, they work pretty well. The technology is showing reliability, and storage, which was our biggest commitment, has worked splendidly. That proven performance is what gave our companies the strength to win international projects.
The great negative effect the remunerative reform has had on the industry at international level has been that winning a project in South Africa or Morocco −if you want to be the licensee or the promoter− may cost about half a million euros. The problem is that previously in Spain solar thermal plants were remunerated according to Royal Decree 2366/1994, and companies had a certain margin to develop this promotion activity abroad, which they currently do not have. Now it is nearly impossible to think that we can promote a project abroad, but the truth is that, since we are the best in technology worldwide, anyone, whether it be EDF, Aqua, or Solar Research, that wins a project in South Africa or Morocco, calls Spanish companies to do it, so we the Spaniards are still the ones making power plants around the world. In this sense, the industry is having a certain continuity that it does not have in Spain.
Why is there no longer such continuity in Spain?
What happened in Spain is that the first Decree enacted by this government in 2012 was a moratorium to renewable energies. Since 2012, the first wind farms and biomass plants have just recently been auctioned. Since the Popular Party came into power, there has been no support for renewable energies whatsoever. It is true that there is an installed overcapacity in Spain, and that goes against anyone who wants to start a new generating project in the country. The outlook is very bad, unless the government realizes that the plants we need to build are the ones that will be operational in 2030-2035-2040, when supposedly fossil-fueled power plants will not be able to support as much as now, and therefore where manageability will be essential. Our primary purpose with the new government is to help them understand that the growth of renewable energies in Spain, which is still necessary to achieve the 2020 goals, not only has to include a percentage of renewables, but it must also include manageability. Developing renewable energy without manageability is not sustainable in the long term.
Is the industry really halted? Or is it one of the least affected by the Royal Decrees?
In terms of investment, it has been zero. There has been no investment at all in Spain. And the remunerative modification has stopped Spanish companies from becoming promoters abroad. This has caused an irreparable damage, because we have left the door open for some very powerful competitors. Regarding employment, when we were still building power plants, we had a direct level of employment in our industry of around 25,000 people, and now we are down to 4,000 people, who are the individuals linked to the operation of plants. It is true that, in comparison with other technologies, our plants have a high cost, but they also create jobs, even in the operation phase. In fact, each of the 50 plants operating in Spain has 50 employees. In the end, there are nearly 2,500 people linked to the operation of facilities, and thus it is a very relevant industry in some regions.
Considering the political parties’ programs, how do you see the scenario for the new government? Are changes expected?
I think so, and even the Popular Party wants to change the matter. There is no doubt that the new future will be one hundred percent renewable and this is already a reality. No one doubts that the new generation will be renewable, but the thing is that old technologies will last a little longer. We have spoken with all the parties and they all have shown to us a very positive feeling that the future will be more renewable.
The Secretary of State recently said that “by their nature, renewable energies are intermittent, with no certainty of sun or wind, and that needs to be covered. This generates uncertainty in the market, which generates costs for €1 billion. What can you say about it?
After ten years of developing renewable energy, we have come to the conclusion that there are two types of renewable energy: one that is inexpensive but is not manageable, and another that is manageable and is a little bit more expensive. The Secretary of State may be referring to the first one, which needs support. The problem is that said support generates a cost. I would like for the new government to understand that one thing is very clear, there will never be a coal plant, a combined cycle power plant or a nuclear energy plant in Spain, because no bank in their right mind would finance a power plant that burns fossil fuel without knowing whether the COP, and not 21 but the following, will tell them that the carbon emissions rate is extremely costly or imposes restrictions on the transaction. Actually, the conversation on climate change is gaining prominence, the measures taken in Paris will be difficult to implement, and as we move forward during upcoming years, the need for a stricter regulation against burning fossil fuels will be there. The International Energy Agency has not recognized it yet, but I dare to suggest that in upcoming years we will see the proportion for new capacity in the renewable energy market go up from current 65 percent to 90 percent (with conventional energies at 35 percent). And of course, there will be no new fossil-fueled power plants in Europe. There are renewable energies that are manageable: hydraulic, biomass and solar thermal, just to mention, and what we need to do is to commit to them, even if nowadays they are more expensive. In fact, the International Energy Agency expects that solar thermal energy will be the leading technology in many regions of the world by 2050. Let’s not be blind and commit to it.
Keeping global trends in mind, and what was agreed on the COP21, isn’t Spain swimming against the tide? Have we taken a step back in renewable energy development?
There has been no support since 2012. We have a particular case in Spain, because we had a tariff deficit and excess capacity. These two factors work against the possibility of a very determined promotion of renewables in our country. We’re not asking for another 2,000 MW of solar thermal energy, but rather two types of tenders to meet the 2020 renewable energy goals from now on: one for manageable energies and one for non-manageable energies, or rather make separated tenders for different technologies, as it happened recently. Treat each one with the maturity in price they have at this moment.
Given the overcapacity situation in the Spanish market, development is very limited…
In Spain, sooner or later we will have to request coal plants to shut down, and someone should dare to put nuclear plants on reasonable profitability, and therefore we will see no interest in expanding their service life. This transition will not happen by tomorrow, but in the 2020 scenario it will be necessary to think of ways to replace fossil-fueled technology with manageable renewable technology, and that is something we need to start building now. I don’t know how long combined cycles will last under this situation. In fact, many companies would like to disassemble the cycle and take it to another country, because there are many cycles operating for very few hours. What we need to set out for the 2020 scenario is a more rational situation in which there will be less combined cycles and more renewable energies.
The situation is no better in the rest of Europe, where no megawatt was added in 2014. How was it in 2015?
In Italy, which was another country where there were development expectations in this industry, it has not occurred due to legislative and environmental limitations, and due to something we have not been able to understand in Spain, which is that there has been a lot of opposition from citizens. This has not been the case in Spain because renewable energies have always been a win-win system for all. Portugal has very good areas for developing power plants; in Italy there will shortly be a new legislation that will hopefully boost solar thermal energy, and in Greece and Cyprus some projects were approved to be financed by the European Union, but sadly they were not able to carry them out due to their financial difficulties.
If electric interconnection in Europe becomes a reality, will there be more room for the development of the industry?
Right now the connection with France has expanded, going from 2,000 MW to almost 5,000 MW. There are some myths that need to be busted, like that we import a lot of nuclear energy from France, because it is physically impossible, even though it is now expanded. If Europe wants to be energetically sustainable in a distant future, it will need to depend on the North Sea winds, and the sun in Southern Europe. Interconnection is essential in this long-term vision because the wind and the sun are seasonally offset and it is very easy to achieve energy sustainability. In ESTELA, we are defending the progress of interconnections, to be super GRID and to become a reality as soon as possible, because that way we can develop more projects here in Europe where they are needed, and during the summer months we will be able to supply energy for central Europe.
Are Spanish companies still leaders worldwide? Or are companies from other countries gaining ground?
I would say they have, but we can still defend some of it. We are no longer promoters abroad, and with that we have lost the momentum we had a few years ago; however, we still have the advantage of being builders abroad. This means that companies are still making an effort to invest. Every company was conducting its own research. There are many companies making modifications, generally incremental, although there are also some coming up with new concepts, so when they make an offer abroad they get a better rating than those who don’t. We are world champions in technology and construction, and with that we are sure that Spain will have a place in all the new markets opening up, and this is also thanks to the fact that we have 50 power plants, we have operational know-how, which provides companies with a better position when it comes to winning projects abroad. No one knows how to get the most out of a solar thermal power plant like we do, and also no one knows how to build it like we do. We have a great market volume to defend, and that’s why companies continue to make incremental innovation. We ask the government to invite tenders for solar thermal energy project soon, although not too ambitious, but one that allows us to keep making the most advanced power plants abroad, while still holding our ground here.
Which overseas markets are the most interesting for solar thermal power?
Right now, Morocco and South Africa; the politicians responsible for these markets have understood the importance of manageability. In many other places, the poem by Machado that says only a fool mistakes value for price would apply. Many politicians in a lot of countries are fools. They say they want renewable energies and then ask who will offer the cheapest price. There are operational elements that make the value of one technology very different from another. When planning, it is important to do it thinking about not only the price you can get for it, but also the value that it will contribute to. And this is why we ask for tenders divided by technology, in which solar thermal energy and biomass energy have a major importance.
Is Latin America a potential market?
Yes, it is. Chile, for example, along with Australia and South Africa, is one of the ideal places for development. In Chile, Abengoa, which won competing against combined cycles, is building a power plant. Works are currently halted due to Abengoa’s situation, but more than half of it is completed, and it is very clear for the investment fund Abengoa is supporting over there that it has to be completed, because the costs of leaving it unfinished make no sense. That facility will be the first baseline power plant, in which we are hand in hand with photovoltaic energy. Northern Mexico is essential, and the U.S. will be the country with more installed solar thermal power.
Technology evolves and renewable energies that are not manageable nowadays will be at some point.
The big problem that non-manageable technologies have is the big headache of what to do with their surplus of power. We believe that before taking a pill for the headache it is better to avoid the disease. If you expand the renewable energy system with manageable technology, it won’t be necessary to think of ways to storage. It is true that photovoltaic will have cheap batteries, but when speaking to experts they will tell you that having cheap batteries with no bottleneck and generating no residues will take at least seven years. Our challenge is to lower prices, and I’ll only say that having reached just five gigawatts (GW) worldwide, while wind power has 400 GW and photovoltaic power 200 GW, we have lowered prices a lot more than photovoltaic energy in its first 5 GW. We have that seven-year window of opportunity to be able to say that, despite the fact that they can develop systems, ours will already be price competitive, and ours will always contribute something extra, namely, inertia to the network. Right now, we have the value, and in the future, when we reach 30 GW, our prices will be competitive, they will be under the famous double digits. In the 2020 scenario, we will drop below 10 cents per kilowatt/hour. In Spain, it will be a bit more expensive, around 12 per kw, and if you add the value, we will be competitive.
What is the investment worldwide?
There was a moment in Spain when investment was about €5 billion. If 1,000 MW are being developed right now around the world, it would be near €4 billion per year. Now China is going to launch a program and it will go up. At an investment level, it cannot be compared to what is being invested in photovoltaic or wind power.
Abengoa was the crown jewel and now its situation is far from that. Does it damage the image in the sector? Do you see any possible solution to the current situation?
In Spain, 15 out of the 50 power plants were owned by Abengoa, but two years ago they were transferred to a company now called Atlantic Yield. Right now, they belong to a creditworthy company listed in the U.S. stock market, which has a large number of investors ensuring the proper development of Abengoa, and it is perfectly managed. This company is in charge of operating these power plants as best as possible. In Spain there was no impact, since plants are controlled by another company. However, Abengoa damaged the industry because it was our flagship in overseas promotion, and that is what we lost. The accumulated debt was so big that it was hard to think of another solution, but it is true that all the projects in its portfolio are profitable. Abengoa losing its capacity to win concessions and open markets is nonsensical, because it is possibly the company with more references to keep winning said concessions, and it has the qualified staff to carry out the projects. I wish new managers to understand that eliminating R&D and solar thermal promotional activity is not the solution.