Spain abandons coal: competition from renewables and the high cost of emission rights decide…

Coal-fired power plants – reviled for their high levels of pollution and their strong contribution to global warming – are saying goodbye in Spain. An accumulation of circumstances is anticipating the end of this mode of electricity production.

In 2019, coal has only covered 5% of electricity generation, so its production has fallen in the peninsular territory by almost 70% compared to the previous year. In the previous two years, this energy source had contributed 14.2% (2017) and 17.2% (2018) of electricity demand.

The decline in coal has as its first major effect a drastic reduction in CO2 emissions from the electricity sector, which will help Spain meet its climate objectives.

CO2 emissions (the main greenhouse gas) from burning coal fell by 69% last year (from 33.5 million tons of CO2 to 10.3 million tons).

Taking into account that a good part of the coal was supplied with natural gas from combined cycles, the final balance of these two fossil fuels resulted in a 32% decrease in emissions in 2019, according to an analysis by Jaume Morron, a consultant specialized in energy.

The closure of As Pontes (A Curuña), the largest power plant in the State, symbolizes the decline of this energy source

Numerous tests show the decline of coal. December 14 was the first day in which coal has not been used for electricity generation in mainland Spain.

On 27 December, Endesa submitted the formal request for the closure of the coal-fired power plants imported from As Pontes (A Coruña) and Litoral (Carboneras, Almería), which will close within a year and a half, as planned.

This is a very relevant decision, since the Galician power plant is the largest in Spain. The company Endesa reported that, “given the clear absence of prospects for improvement in the future”, the “lack of competitiveness” and the “profound modification of market conditions”, it has chosen to renounce coal in the Peninsula.

Endesa already decided to do the same with the Compostilla (León) and Andorra (Teruel) plants, although in these cases the plants were already predestined at closing on June 31, 2020, since the necessary investments in decontamination filters to comply with the emission limits established by the EU (and which enter into force on that date) were not addressed.

Competition from renewables and the high cost of emission allowances explain the evolution of the sector

Other companies have long since decided to stop producing electricity from coal. Iberdrola announced in November 2017 that it had requested the then Ministry of Energy to close its last two coal plants, Landa, in Asturias, and Velilla, in Palencia. With these announcements, in mainland Spain only three coal plants of the main energy groups will remain active: those of Aboño and Soto de la Ribera, in Asturias (of the company EDP), and that of Los Barrios, in Cádiz (of Viesgo).

All this occurs largely because companies renounce to make investments to comply with European regulations, since they are not profitable. In other cases, the reason is the cheapening of renewable sources, which are increasingly competitive.

On the other hand, the increase in the cost of emission rights that companies must pay influences the decision to throw in the towel.

Emission allowance prices have gone from an average of €5.8 per tonne of CO2 in 2017 to €24.8 per tonne in 2019.

“The electricity companies are opting for the closure of coal-fired power plants for market reasons and not because the law says so, as other European countries are doing,” Tatiana Nuño, of Greenpeace, explains to this newspaper.

Most Western European countries have established by law a date for the closure of these plants.

Most Western European countries have established by law a date for the closure of these plants. On the other hand, in Spain neither the draft climate change law nor the National Energy and Climate Plan 2021-2030 sent by the Government to Brussels (to comply with the Paris agreement) indicate the definitive end of coal thermal plants. These documents leave it to the market itself to act. However, it is not ruled out that exceptionally some thermal continue to operate beyond 2030.

Greenpeace calls for the total closure of these plants in 2025 and for a law to be passed to speed up their closure, something that now requires long and complex processes; it is not enough for the electricity companies to request it, but an environmental assessment of the site is also required as well as an authorization from Red Eléctrica in which it is proven that the measure will not produce imbalances in the electricity system or risk of shortages.

The recent government pact between the PSOE and Podemos is inconcrete on this point. The agreement indicates the objective of achieving that by 2050 100% of electricity is of renewable origin, but does not mark intermediate milestones “to act in line with the severity of climate change,” says Nuño.

“The closure of these plants is great news on the road to the decarbonization of the economy but it had to occur sooner, given the climate and health impacts they cause,” says Fernando Prieto, director of the Sustainability Observatory. “Now it is urgent to close the gas plants as soon as possible, where electricity production has passed, to promote renewables,” adds Prieto. Promoting distributed generation and “decarbonizing the islands” are the new “inescapable challenges” for this expert.

Source: The Vanguard