This is a best prospect industry sector for this country. Includes a market overview and trade data.
Last Published: 6/24/2019

Overview

Demand for electricity in Spain continues to increase for the fourth consecutive year. In 2018 the demand reached 268,808 GWh, a 0.4 percent increase from the previous year. Energy generation decreased 0.5 percent, mostly affecting coal-fired and combined-cycle generating stations; with production having decreased by 17.2 percent and 18.9 percent respectively. In terms of international exchanges, imports exceeded exports by 11,102 GWh.

In 2018, installed power capacity in all of the generating facilities in Spain fell for the third consecutive year, ending the year with 104,053 MW, 0.1 percent less than the previous year. This was due mainly to the definitive closure of the Tarragona Combined Cycle Power Station. Wind power has increased by 1.5 percent. The rest of the electricity generation technologies showed minimal or insignificant variations. Electricity demand on the Spanish Peninsula maintains the positive trend shown over the last four years (253,495 GWh). It is worth noting that in 2018, over 40 percent of total generation was obtained using renewable energy technologies. Electricity demand grew in most of the non-peninsular systems, except in the Canary Islands. Renewable energy covered more than 10 percent of demand in the Canary Islands, a significant value for an isolated electricity system.

Leading Sub-Sectors

The Spanish energy sector is well developed and has a positive reputation globally, especially in renewable energy, where it is a world leader. Spain is working on its National Energy and Climate Plan for 2030 with the goal of renewables making up 42 percent of all of Spain’s energy in 2030 (10 percent above the EU target) and 100 percent by 2050. Earlier this year, Spain submitted its Strategic Energy and Climate Framework, which includes the National Integrated Energy and Climate Plan 2021-2030, the Draft Bill on Climate Change and Energy Transition, and the Just Transition Strategy. The document proposes a reduction of between 20 percent to 21 percent of greenhouse gas emissions compared to 1990 levels. It plans to achieve up to 42 percent consumption of renewable energies out of the total energy use by the year 2030. As for electricity generation, the age of renewables will stand at 74 percent. By reaching these targets, Spain’s energy efficiency will improve by 39.6 percent by 2030.
In the renewable sector, self-production/consumption has proven to be a promising prospect. On April 5, 2019, the Spanish government approved a Royal Decree to regulate the new conditions for self-consumption of electricity encouraging collective self-consumption and establishing a simplified mechanism for compensation of self-produced and unconsumed energy. This new decree put an end to the so-called 'sun tax' that was introduced four years ago by the previous government, which taxed the development of photovoltaic solar energy and self-consumption. Spain will now be in line with its European neighbors and closer to achieving its ambitious 2030 targets. Among the measures introduced by the Royal Decree, the authorization of collective self-consumption, aiming to benefit both households and small businesses, stands out in particular. This will allow for several consumers to be associated with a single installation of solar panels, as well as the installation of photovoltaic panels in adjacent buildings that have better orientation. This process simplifies administrative procedures and mechanisms for compensation of self-produced energy.
Other top energy market sectors for U.S. businesses include natural gas, energy efficiency and smart grid developments. Spain has no domestic production of liquid fuels or natural gas. Thus, there are government regulations that support Spain’s oil and gas imports from multiple countries which diversifies their suppliers. Spain actively supports the creation of a Single European Energy Market. The very limited interconnection between Spain and France restricts trading between Spain and the rest of continental Europe. Spain plans to link the development of interconnections with the renewables target to consider increasing the installed power capacity of these technologies. Europe is in the process of reformulating its energy policy; a process in which both the Energy Union and the interconnections play a key role. In the coming years, strengthening interconnections will become the highest priority in the development of the transmission grid in Spain. Investment in this infrastructure will be necessary. For its full implementation, maintaining regulatory stability and adequate returns on investment as well as a greater social acceptance of the facilities is needed. The Iberian Peninsula is much less interconnected with the rest of the European system than other EU countries, preventing easy access to the benefits of electrical interconnections. In Spain, the current interconnection ratio is less than 5 percent -- well below the minimum recommended goal of 15 percent by 2030 established by the EU.
LNG imports are projected to grow in Europe as new suppliers – notably the United States – increase their presence in international markets and more European countries build LNG regasification capacity. However, import dependence is only one part of the gas security equation. Less attention is being paid to three issues that may, in the long run, have an even greater impact on gas security in the European Union: how easily gas can flow within the European Union itself, how patterns of demand might change in the future and what role gas infrastructure might play in a decarbonizing European energy system. Spain imported 42.6 Billion cubic feet (Bcf) of U.S. LNG and Portugal imported 32.4 Bcf making the Iberian Peninsula the largest U.S. LNG importer in Europe for a total of 75 Bcf. Spain regasification capacity counts for 40 percent of the total LNG regasification capacity in the EU.

Opportunities

Spanish renewable energy firms are extremely active worldwide. Opportunities exist for U.S. firms to partner with these Spanish firms in projects in Europe, Latin America, the Middle East and Africa. Joint ventures and partnerships will play an important role in capturing market share and in injecting necessary capital and state-of-the-art technology in these regions. In Spain, the government is exploring ways to persuade the private sector to invest  EUR 100 billion (USD 118 billion) for the transformation of its energy system as it tries to move beyond past policy mistakes that led to widespread losses and lawsuits, to draw up plans to expand renewable power generation, to modernize its transport system and to refit buildings to make them more energy efficient through 2030.
Energy efficiency is a sub-sector that shows growth prospects. Spain is one of the European countries with the highest index of energy consumption based on GDP. Electricity prices are high which leaves significant business opportunities for companies that offer energy efficiency solutions. In regard to the main measures involving decarbonization levers the investments that the Spanish economy would have to make between 2016 and 2050 would amount to between EUR 330 - 385 billion (USD 390 – 455 billion).
The EU Energy Efficiency Directive was revised in December 2018 through Directive (EU) 2018/2002. The main amendments to the 2012 directive include:

  • Meeting a 32.5 percent energy efficiency target by 2030 and anticipating further improvements after that
  • Removing barriers in the energy market that obstruct efficiency in the supply and use of energy
  • Letting EU countries set their own national contributions for 2020 and 2030
  • From 2020, EU countries will require utility companies to help their consumers use 0.8 percent less energy each year (which will attract private investment and support new competitors in the market)
  • Clearer rules on energy metering and billing, strengthening consumer rights, in particular for people living in multi-apartment buildings
  • EU countries must have transparent, publicly available national rules on the allocation of the cost of heating, cooling and hot water services in multi-apartment and multi-purpose buildings where these services are shared
  • Strengthening social aspects of energy efficiency by taking energy poverty into account in designing energy efficiency schemes and alternative measures.

The energy efficiency sector in Spain represented 1.8 percent of GDP and 1.4 percent of total employment. The private sector is also investing in smart grid development and R&D to promote increased competitiveness for Spanish utility providers. It is estimated that a EUR 1 (USD 1.18) investment in smart grid technology generates EUR 2  - 2.3 (USD 2.4-2.7) in economic benefits. The Spanish government estimates that implementing the carbon-reduction plans would require 200 billion euros of total investment in the next decade, 47 billion euros of which would come from the public sector.
Smart energy, which is part of the infrastructure of smart cities, combines diverse new technologies to improve resource efficiency, increase sustainability and improve the lives of those living in smart cities. The deployment of advanced energy technologies is not so much a technical challenge as it is an organizational one requiring changes in governments and society as a whole. These changes are necessary to better engage consumers and allow for cross-sectoral leveraging of assets. Making a city smart is therefore a very multidisciplinary challenge, bringing together city officials, innovative suppliers, national and international policymakers, academics and civil society.
Spain plays an important role in smart city development throughout Europe as one of the 31-member countries of the European Innovation Partnership for Smart Cities and Communities. The Partnership combines energy management, information and communications management, and transportation management to come up with innovative solutions to the major energy/environmental, societal, and health challenges facing European cities today. It seeks to reduce high energy consumption, greenhouse gas emissions, poor air quality, and road congestion. The Partnership aims to overcome bottlenecks impeding the changeover to smart cities, to co-fund demonstration projects, and to help coordinate existing city initiatives and projects by pooling its resources together. It ultimately hopes to establish strategic partnerships between industry and European cities to develop the urban systems and infrastructures of tomorrow. As a member country, Spain plans to implement the Partnership’s recommendations to become a world leader in smart city creation and management.
Stakeholders:
The Ministry for Ecological Transition (MINET) is responsible, at state level, for proposing and executing government policies in relation to energy. Among other functions, the MINET is responsible for adopting the necessary measures to secure the supply of electricity and the economic and financial sustainability of the electric system. The MINET’s role also includes granting the relevant authorizations for facilities with an installed capacity of more than 50MW, when they affect the territorial scope of more than one autonomous community, and when they are offshore in the territorial sea. Autonomous communities or regional governments are in charge of developing basic state-level legislation. They also grant the necessary authorizations when the electric infrastructure solely affects their territory unless such authorizations are expressly reserved for the MINET. At the municipal level, town councils oversee granting the necessary works and activity licenses for the installation of the facilities.
The National Commission for Markets and Competition (CNMC) is the independent regulator in charge of supervising and controlling the proper functioning of the electricity sector. It also oversees the degree and effectiveness of market openness and competition in both the wholesale and retail markets. The CNMC has been vested with several functions for these purposes, the main ones being: consultancy functions (to issue obligatory reports in relation to regulations, authorization, amendment or dismantling procedures for electric installations, energy planning, economic regime, quality of supply, etc.), conflict resolution (access to the network), and imposing disciplinary measures.
Red Eléctrica de España, SA (REE) is the sole transmission agent and system operator (TSO) for the Spanish electricity system. Among other duties, it is responsible for guaranteeing the continuity and security of the electricity supply, for ensuring proper coordination between generators and the transport and distribution networks, and for operating and managing the transmission grid. REE is a company partially owned by the state (20 percent).
OMI-Polo Español SA (OMIE) is the electricity market operator. It manages the wholesale electricity market for the Iberian Peninsula (Spain and Portugal) where market agents trade the amounts they need (MWh) at transparent prices. OMIE also carries out the invoicing and settlement of the energy traded on these markets and oversees the corresponding financial settlements. In addition, the Iberian Energy Market Operator (OMIP) (Portuguese Division), SGMR, SA manages the futures market (forward and derivatives) on the Iberian Peninsula. OMIE belongs to the Iberian Market Operator business group.
In the liberalized market context of the energy sector, although subject to a high degree of regulation, all operators are private (except for the 20 percent stake held by the state in REE). The CNMC publishes an annual list of the principal operators in the energy market, that is those that hold one of the five largest shares of the market or sector in question. The dominant operators, those whose market share exceeds 10 percent, continue to be Endesa, Iberdrola, EDP and Naturgy. In the case of gas, Naturgy remains the main market operator, followed by Endesa, Iberdrola and Cepsa Gas. The main operators in the fuel sector are Repsol, Cepsa, BP, Galp and Disa. In the segment of liquefied petroleum gases (butane and propane), the leaders are Repsol, Cepsa, BP, Naturgy and Disa. In the natural gas sector, there are only two dominant operators, whose market shares exceed 10 percent which are Naturgy and Endesa. Repsol and Cepsa are, for their part, the dominant operators in the sectors of fuels and liquefied petroleum gases.
The stakeholders in the energy sector in the evolution of Spain’s energy include the public sector, Institute for Diversification and Energy Saving (IDAE) at State level, and trade groups such as Aelec (former UNESA, Spanish Electrical Industry Association) that groups the largest utilities in Spain. 

Web Resources:

Spanish Energy Sector Publications:
Energías renovables
Energía de hoy
Energética 21
Profesionales hoy
El Diario de la Energía
Solar News
Future energy web 
Mundo Energia

European Union Policy Resources: 
Energy EU Commission Department

Energy Sector Trade Events:
Smart City Expo World Congress 
Energy and Environment International Trade Fair - GENERA 
International Trade Fair for the Electrical and Electronics Industry - MATELEC


Trade Associations:
SERCOBE (National Association of Capital Goods Manufacturers)
Aelec (Spanish Electrical Industry Association)
APPA (Renewable Energy Companies Association)
ANESE (Energy Services Companies Association)
Asociacion3E (Energy Efficiency Companies Association)
AinENERGIA (Energy Engineering Companies Association)

Engineering and Services Firms:
ABB, S.A. 
Applus, S.L.U. 
Bureau Veritas
COAPSA Control, S.L. 
Empresarios Agrupados (EA), A.I.E. 
Global Energy Services 
Grupo AMS 
Grupo Copisa 
Grupo Dominguis 
Grupo Eulen 
Iberdrola Ingeniería y Construcción, S.A.U. 
IDOM  
Medidas Ambientales, S.L. 
Sener, S.A. 
Siemens, S.A.
Tecnatoms, S.A. 
Técnicas Reunidas, S.A.
IDEA Energy Services Companies Database


U.S. Commercial Service Spain:
Sector Specialist: Carmen Adrada

Tel: +34 91 308 1542
e-mail: carmen.adrada@trade.gov

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.