Long-term PPA to build giant solar park in Spain
Setting the scene
The 175 MWp Don Rodrigo solar farm is the first and largest subsidy-free utility scale photovoltaic plant in Europe.
Located close to Seville, it is the ultimate proof of being able to produce renewable energy at lower costs than any other form of conventional generation without any government subsidies or state support – the long-anticipated moment when renewable energy achieves grid parity.
Meeting the challenge
First conceived in 2012, Don Rodrigo has been six years in the making. Back then, with the Spanish Government applying policies to actively reduce revenue across solar projects, the decision to proceed was not an easy one.
This challenge and political risk led BayWa r.e. to take the unprecedented step to move ahead with the project without any subsidies or incentives, and independent of any government involvement.
The site already benefited from strong levels of solar radiation, relatively flat ground, a nearby grid connection and was well priced.
The ability to achieve grid parity and build Don Rodrigo without any government involvement then came down to two key factors; reducing the build cost and securing a long-term Power Purchase Agreement (PPA).
A major factor in the project’s success, and unknown benefit of the protracted planning process, was the significant reduction in costs. Construction costs, including materials and labour, together with panel and system costs collectively fell by 20 percent year-on-year.
To qualify a project for investment grade and long-term financial investors, it needs to secure its long-term revenue. For Don Rodrigo, this was achieved through a 15-year PPA with Norwegian utility Statkraft.
Getting the result
Europe’s first commercial solar park of its scale to reach grid parity without any form of subsidy was completed at the end of 2018.
It represents the culmination of a six-year journey, which has proved it is possible for renewable electricity to be produced at a cost cheaper than any other conventional form of generation technology.
With a projected lifespan over 30 years, it is calculated that the project will be able to deliver electricity at a Levelised Cost of Electricity (LCOE) of €25/MWh; a significant number when measured against Spain’s projected electricity prices of between €50/MWh and €70/MWh.
Being part of one of the first grid parity projects is a real milestone for us and shows that we are on track with our ambition to be a leading provider of green energy to our international customers. Don Rodrigo also demonstrates that the full market integration of renewable energy is now possible.