Greenalia’s projection in these fifteen years of activity has been impeccable. With Manuel García, the company’s CEO, we reviewed the company’s short-term plans and analyzed some of the hottest issues on the Spanish energy scene, such as the expiration of access and connection permits.
What has been the evolution of Greenalia in these fifteen years of activity?
We have gone through several regulations that have led to an important stoppage in the sector to move to a stage, in the last four to five years, where it has once again bet on renewables. During this time, Greenalia has managed to consolidate several projects, the result of the first auctions, such as the Curtis-Teixeiro biomass plant, which is one of the largest in Spain and southern Europe, and, later, various wind power projects. We have also made the leap to photovoltaic, offshore wind and, now, to batteries with the expansion to other markets such as the American one, without forgetting our listing on the stock market in December 2017.
How many facilities do you have running and what plans do you have for the coming years?
Right now we have 50 MW of the biomass plant in operation and 75 MW in five wind farms, and under construction 110 MW of wind in Spain plus 670 MW of photovoltaic and 170 MW of batteries in the US. This year we expect to close close to 30 million Ebitda and by 2023 we maintain our goal of 100 million with projects in operation or construction. Before the end of the year or the beginning of next year, we want to launch the new 2022-2026 Strategic Plan, with the aim of reaching 4 GW. We will present it as soon as we are clear about the Government’s measures regarding the access and connection points and as soon as we know the content of the incentive plan that the American Government plans to approve shortly for the promotion of renewables.
How are the floating offshore wind projects in the Canary Islands going?
Of the five projects we have in the Canary Islands, one of them, the 50 MW Gofio wind farm, is well advanced. It has come out to public information and we believe that within the next year it could have the Environmental Impact Statement (DIA) and, later, the administrative authorization. The other four projects -Dunas, Mojo, Cardón and Guanche- of 50 MW each, are prior to the June moratorium and we hope that they will be reactivated to continue developing them in the coming years.
Greenalia has made the leap to the US. How has the whole process developed?
Our entry into the US is related to Greenalia’s business plan to have 1 GW by 2023 because we analyzed the situation and concluded that, only with the projects in Spain, we were not going to be able to comply and we did not want to fail the investor. We have always complied with what we have said and we want to continue like this. The US facility is very large and the idea is to put it into operation by the end of 2023. The US is currently the most attractive market in the world to invest in, and it will be even more so when President Biden gives the green light to the incentive plan that expects approval before the end of the year. In addition, management in this country is much easier for a company like ours, since with a single implementation you can cover the entire country, even though each state has its own regulation. We are currently setting up our own structure with local staff, which we will increase in the coming months. In addition to the ready to build project that we have already identified, we have projects of between 2 and 3 GW.
At what point is the issue of access and connection permissions? Will there be an extension?
The expiration of these permits would be a failure for the entire sector. This would also be a great frustration for the administration technicians, who are making a great effort to try to get some projects out that are already well advanced, and that would mean returning to the starting line. What they tell us from the different administrations is that they do not have enough resources to attend to all the avalanche of projects and, therefore, if we do not reach the DIA, it is clear that it is not the fault of the promoter. The administration has to reflect. All this represents a loss of opportunity for Spain, especially in a context of high prices where it has been seen that renewables are the only measure to lower them, constantly and sustainably.
Greenalia is listed on the MAB. When do you plan to jump into the continuous market?
We do not have a specific date. Today we operate as if we were in the continuous market, although we are preparing ourselves at the corporate level, with the help of Lazard, in case we identify a window at a given moment and make the leap. We prefer it to occur when we have significant ebitda from projects in operation and under construction.
Why didn’t they show up for the renewables auction that was held in October?
We didn’t even sign up. Most of the developers that have gone to that auction, especially those that have obtained large volumes, do not have the projects authorized or with the DIA, and have gone with the expectation of having them in December or April. They are public data. I am glad that we have such optimistic businessmen in Spain. I am too, but I am listed, and my optimism may turn around tomorrow and the investor will tell me that I have been unconscious. In the auctions you play €100,000 in guarantees (auction and access and connection) that remain in the hands of an administration that has already said that it will not arrive. Most of the capacity reserve that is being made in the auctions and that is expected to enter in the next four years, will not enter. This is not new, it has happened in previous auctions, mainly in wind power, which has a greater complexity in the processing. The administration has instruments to fix this: either by extending the term or by creating a framework so that when a promoter meets his requirements, his term does not expire. It seems that the Ministry is designing auctions for two or three months from now. We all applaud having a government that does medium-term planning for renewables and, now that we have it, we can spoil everything by hastily holding auctions without having solved the problem of expiration of access and connection permits. Resolving it is key to optimal development of renewables.
Do you plan to attend the biomass auction?
Both from APPA Renovables – of which I am a member of the Board of Directors – and from what has been analyzed in other associations, we prefer that the Ministry review the conditions and launch the auction within a few months, taking into account the particularities of this technology. With biomass there is a problem. With the regulation of auctions limiting them to 20 years, biomass cannot work. Biomass has a useful life of at least 30 years, requires large investments and has a fuel cost. We have told management that the auction should be 25 years old. If you have less, the prices that the promoters are going to offer will become more expensive. The new regulation also does not establish an update of the price of energy costs and this will be reflected in the auction prices. Another thing to highlight is the part of the exposure to the pool that is applied to biomass and that we believe it should not have because it is a manageable energy. The problem is that they always put biomass in the bag of wind and photovoltaic energy and then the regulation does not adapt well to biomass.
What do you think about the RDl that will link the energy consumed by the PVPC and the industry to the costs of renewables?
I think you have to ask yourself if this measure is consistent at a European level with the guidelines we have, to prevent claims from being made later, creating legal uncertainty and stopping investment in Spain.
What do you think of the measures that Spain has proposed to Europe to stop the escalation of energy prices?
It is true that the administration has to make proposals when there are problems, but when from Europe they tell you that these proposals should go another way, perhaps it is time to reflect and start working on measures at the national level where they do have the powers to be able to act. One of those measures is not to have a failure in December or April with all the projects that are being processed. Another is to help industries make PPAs between producer and consumer. In Greenalia every day more industrialists knock on the door. We are trying to close two very interesting deals. One with an electro-intensive and another with a large Spanish consumer so that they can reduce their costs and improve their sustainability ratings.
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