Foreign investment into Spanish renewables averaged 18 greenfield projects between 2006 and 2011. However, that number fell to barely two projects per annum in proceeding six years, according to fDi Markets.

The first seven months of 2018 have bucked this negative trend, seeing six projects from the likes of Enel Green Power, a leading greenfield investor in renewable energy.

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Spain’s total installed power capacity increased from 55.5GW in 2000 to 104.4GW in 2017, according to GlobalData, a data and analytics company. GlobalData’s latest report states that the proportion of non-hydro renewables in Spain’s capacity mix was just under 5% in 2000, but increased an impressive six-fold to 30.3% in 2017; this number is expected to reach 48.6% in 2030.

“Much of the development of renewable energy in Spain was due to its attractive feed-in tariff [FiT] programme followed by the government until 2012. The phasing out of FiTs in 2012 hit the development of this sector. As a result, the share of non-hydro renewables in Spain’s capacity mix increased from 29% in 2013 to only 29.9% in 2016,” said Chiradeep Chatterjee, Power Analyst at GlobalData. This partially explains the very sluggish growth of greenfield FDI in the sector over the past six years.

“Spain’s new socialist government that came to power in June 2018 adopted a more aggressive posture regarding renewable energy and supported a move in the EU, of which it is a member, to increase the target for renewable energy sources from the present 27% to 35% by 2030,” added Mr Chatterjee. The EU has increased its target to 32% by 2030, which is binding for all its members

Spain is Europe’s third destination for greenfield FDI in renewables, garnering 126 projects since 2003, and is Europe’s second top source of FDI in the sector, according to fDi markets.

Nonetheless, the country needs to reduce its dependence on thermal power sources. It derives most of its electricity from thermal power sources but does not have large reserves of fossil fuels, forcing it to depend on gas imports from from the Middle East, while domestic coal reserves are of poor quality, necessitating imports from South Africa, Colombia, the US, and Russia, according to GlobalData.

“Spain’s geographical location works particularly in favour of solar power, allowing for the higher growth rate. The southern part of the country is sunny resulting in a greater potential for solar power. Furthermore, its location at the southern tip of Europe allows it to act as a hub for the import of cheap solar power from North Africa and beyond,” says GlobalData.

Spain is now developing its renewable energy sector through auctions. In May 2017, the government auctioned 3GW of renewable capacity, nearly all of which was cornered by wind power developers. The next round of auctions for another 5GW of renewable energy was held in July 2017.