April 11, 2021

Carlos Andreu: An impact that can be overcome


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Let us start the reflection based on some data: the Council of Ministers sent the Cortes on May 19 the Draft Law on Climate Change and Energy Transition. To put this Bill into context, it is necessary to remember that two fundamental tools had already been created within the EU to establish the framework for action on climate change action according to Regulation 2018/1999 of the European Parliament and the Council of 11 December 2018 on the governance of the Energy Union and Climate Action: the Integrated National Energy and Climate Plans (PNIEC) and the Decarbonization Strategy to 2050.

The PNIEC, which is sent by each Member State, must cover a time horizon between 2021 and 2030 in its first version, while the Decarbonization Strategy to 2050 must present a path consistent with the decarbonisation objectives of the economy by 2050 , both consistent with each other – of course it is – and with the 2015 Paris agreements. The 36 articles of this submitted Bill outline the action plan.

All these plans, bills and macro agreements shared by the Member States with the EU require for their viability the mobilization of the different administrations and necessarily of the private actors. And what is the impact of the Covid-19 In all this?

Well the answer is obvious: as it is essential, for reasons of necessary financial resources, that the measures be consistent with the next financial planning period 2021-2027 within the EU, the most recent statements by the current President of the Commission European Union put absolute priority on the main lines -in spending and investment- in the deployment of new capacity for renewable energy generation (extraordinary measures linked to minimizing the impact of the Covid-19 included and more than relevant for countries such as Spain, Italy, Greece and Portugal).

The photovoltaic sector (self-consumption included) presents in the short term (2021-2027) in Spain some positive prospects according to the previous analysis and it will continue to be profitable to invest in it, and not only because it allows compliance with commitments on climate change and energy at the international level, but also because it supposes job creation, economic wealth and, especially in Spain, because it is driving motor of both SMEs and the industrial sector, both very affected also by the economic and social crisis that Covid is generating.

After this macro reflection and going down to a greater detail of initiatives and proposals, the development of the photovoltaic industry in the face of this post-Covid crisis situation would require measures such as those proposed by the Spanish Photovoltaic Union (UNEF) in its plan to reactivate the sector: reduction of the fixed term in the invoice, the digital processing of all administrative processes or the reform of the Horizontal Property Law, all measures with an impact in the short term but also in the long term, facilitating the structural growth of this industry in Spain.

Another element of reflection amid the Covid-19 impact is the current downward trend in electricity consumption and the price of kWh of electricity, which can reduce the attractiveness of investment in photovoltaic self-consumption. I believe that this situation is transitory, conjunctural and that the dynamic effort of society and its economic agents will, in a medium period of time, correct the downward impact on the growth of self-consumption, and will be – in addition – in a few quarters.

It should not be forgotten either that the development of photovoltaic self-consumption is an integral part of the energy policies covered by the EU financially (and included in the extra-investment axes with community funds for recovery after Covid).

Despite this macro analysis – which is positive in maintaining the support lines announced by the EU – it is true that in the short term we can observe delays in projects under construction and already planned, but that, as they are conjunctural impacts, they will be corrected in the medium term, especially if they can affect the commitments that the EU States are sending in their current versions of these PNIECs.

Let’s remain optimistic: thanks to the focus on recovery plans in the face of the post-Covid crisis that the EU is announcing these days, countries like Spain will be able to continue betting on the increasing development of installed capacity for renewable electricity generation, with the extraordinary impact positive that these investments have in the development of the pymeindustrial fabric, absolutely a structural priority for Spanish society.

Carlos Andreu is a Doctor in Engineering and a professor at EAE Business School

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