Montel Weekly Special – PPAs and Prosumers

The Montel energy podcast - market insights from people in the know. 
Only 40% of planned Spanish photovoltaic projects may actually be built. Listen to the special episode of the Montel Weekly podcast to hear CEO of Audax José Elias discuss market developments in his country, and how “prosumers” will impact the current structure. 

Hosts: 

• Richard Sverrisson, Editor-in-Chief Europe, Montel, 
• Anna Siwecka, freelance journalist/podcaster. 

Guest: 

• José Elias, CEO Audax. 

Transcript

Anna Siwecka, freelance journalist/podcaster: 0:05

Welcome to the next episode of the Monte Weekly podcast. I'm Anna Siwecka. In today's episode, we bring you an interview done at Monte Event Market Insights Barcelona.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 0:19

It is a great pleasure that joining me Richard Sverrisson is Jose Elias. From UXs Energy, one of Spain's large independent energy companies. Jose, can you tell me a little bit about your company and what you do?

José Elias, CEO Audax: 0:32

We started our company eight years ago in the first of the deliberation in marketing in Spain, and we are in this moment operating in nine countries in Europe, Spain, Portugal, Italy, Germany. Poland, Netherlands, and I think that's, that's, yeah. So, so you cover many, many markets. That's for power and for gas. Yeah. Uh, we are operating in gas in Spain, Portugal, Italy, and, and also Netherlands.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 1:00

One of the reasons you were here today we're at our, our event in Barcelona, but one of the reasons we invited you, or one of the reasons that some, some of the things that. You can talk about very, very fluently is, is the development in PPAs in Spain now that's really taken off in recent years. Could you give us some of the reasons why that has happened?

José Elias, CEO Audax: 1:20

Well, we realized two years ago that the PPA contracts, uh, was a very successful contracts that permit. Or allow, uh, uh, build, uh, plants in the south of, uh, uh, America. Mm-hmm. And we thought that, uh, this model, this model of business, it could be, uh, adapted to Europe. Uh, at first it was very difficult because, uh, in, in Spain at last there was, uh, very big operators that. They has not very interested in develop this, uh, this market because they are integrated with the generation and the commercialization. And when we started to develop this market, we realized that decrease of the CapEx of the PB plants and the wind farms will be interesting for us for the use, our cost of the energy for the next years. We have the vision that we could need a rating from, uh, a rating agency. And we started to work, uh, two years ago for improve our rating and, uh, develop the contracts with investors mm-hmm. To develop this, uh, this kind of, uh, plans.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 2:47

And why is Spain so interesting? Is it because it has. So much potential for solar and it's also

José Elias, CEO Audax: 2:53

very windy in places. Well, it's true in Spain there is, uh, more sand than wind and the CapEx for the new plants is, uh, lower in the PV plants than in the wind farms. In this case, we realize that we have to be focused in the PV plants in all the south of Spain and Portugal and also Italy. We think that it's a very good market for the PV plants. Mm-hmm.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 3:23

There's quite a lot of. Of, of gigawatts in the pipeline in Spain. Um, could you say something about the potential going forward, uh, in the next couple of years and also into the next decade? Where's is the sky

José Elias, CEO Audax: 3:35

the limit? Well, not, I think that, uh, uh, the new PV plants are limited. It's very difficult have a PV plan with a evacuation point. And also the, all the papers, uh, when we study all the PV plans that they are authored. Mm-hmm. We think that not all of them, uh, will be built. So not all the plans in the pipeline will see the light of day. No, I think that more or less, uh, 40% of the plant will be our, our reality in the future. What, what is

Richard Sverrisson, Editor-in-Chief Europe, Montel: 4:11

that in terms of gigawatts,

José Elias, CEO Audax: 4:14

more or less? Uh, 55, uh, gigawatts.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 4:17

Okay.

José Elias, CEO Audax: 4:18

But in Spain anyway, subsidy free renewables is, is a fact. I think that, uh, there is not necessary in Spain and also in Portugal. Subsidiary taxes for implant the new, the new plants. You

Richard Sverrisson, Editor-in-Chief Europe, Montel: 4:32

also talked a little bit about prosumers in, in Spain. Um, what kind of an impact could they have on the market here

José Elias, CEO Audax: 4:40

in the future market? Yeah, yeah. I'm sure that the future market and the PPA contracts. R two. Tools, uh, that are a combinated, uh, increase the billion and also the liquidity of the future markets. B PPAs will increase liquidity in the forward markets, yes, but because in this moment we have not BPA market. Okay. And we think that, uh, the future market will be used for schwa or closed the position of the energy companies. Mm. And increase the liquidity for this reason. Okay. Be because you could be, uh, large or short in the position and you will use the future market to, to close the position. Okay.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 5:27

To, to trade that position. Yep. Yeah. But I, I, my question initially was more about, um, small households who maybe put a much smaller scale solar that we saw in the package. Now coming from Brussels, the clean energy package that will enable small householders to consume, but also sell power from their, from their rooftops or from wherever they, where they, wherever they may choose to have the panels. How will this change the Spanish market?

José Elias, CEO Audax: 5:56

I think that low that was signed last Friday will change, uh, the rules and, uh, it's possible also the price of the spot market because, uh, up or down or both. No more volatile. I think that, uh, down, I'm sure. Mm-hmm. Because the, it depends of the lobby that, uh, will make the way to treat this. Okay. But I think that less demand, uh, will impact in down price.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 6:28

Okay. And also on the retail side, the companies selling their power, they will maybe also see. Demand

José Elias, CEO Audax: 6:35

drop. Yeah, it's, uh, it's a, it's a reality. Uh, I think that, uh, utility companies will have to think about our new model of business. So the re the, the

Richard Sverrisson, Editor-in-Chief Europe, Montel: 6:49

utilities may will need to change their business models because if they do not change, then, um, they may

José Elias, CEO Audax: 6:55

not be here in 10 years time. I'm sure, I'm sure, I'm sure that the next five years will change, uh, more of the rules of the system of the electric system in the software of Europe. The new demand that will be from the cars and uh, stock of energy will change the price and the, and the model of. More of, of the operators in, in the software yogurt. But we think that our companies are very necessary for close the market between the generator are also the, that decline. Mm-hmm.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 7:38

So both on the large scale PPAs and also in the lower side of the down the, uh, scale in in, in the retail sector, there are big changes ahead. Jose, let's thank you very much for joining us at the Montel event and for the the Montel pod. Thank you.

José Elias, CEO Audax: 7:52

Thank you very much,

Anna Siwecka, freelance journalist/podcaster: 7:56

and that's all for today. To stay up to date with energy Markets, go to Monte website and follow us on Twitter at Monte News, the Monte weekly returns on Friday the 26th of April after the Easter break. In the meantime, catch up with the previous episodes via the Monte website, Spotify, or iTunes.