These are the main conclusions drawn from the presentation that Kim Keats, Director of Market Modeling at the Spanish consultancy EKON Strategy Consulting, made on the results of its price projection and capacity expansion model during the Solar & Wind SWES Congress 2019.
In the most favorable scenario for the development of renewables, the EKON model expects to achieve 69.4% of electricity generation in 2030, only 4.6% behind the 74% target established by the Government in the draft of the PNIEC. PNIEC has not taken into account that with the expected technological advances in PV and wind technologies, the yields and the number of equivalent hours of operation will increase and it will be possible to achieve greater production with less capacity.
Another conclusions of the EKON model is that, unlike the results observed in other models, the massive entry of renewable capacity, and in particular PV, although it will cause a reduction in the average prices obtained by this technology, will not cause a price collapse (the dreaded «cannibalization»).
As long as the entry of new wind and photovoltaic capacity occurs gradually, staggered, and not suddenly (which would be difficult given the technical and financial constraints), a saturation point will be reached so profitability will fall and investors will lose interest in continuing to install new capacity, and prices will tend to stabilize.
Finally, in relation to the new auctions that the Government intends to carry out to stimulate the entry of renewables, Kim Keats pointed out that in a situation in which wind and PV technologies have reached grid parity, that is, they are competitive and profitable in the current market situation without public aid, it is convenient to let the market decide for itself how much capacity to install, without the need for public intervention.