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Spain

Spain

First steps in green power marketing -- Retailer sees niche in coming market liberalisation in Spain

Electra de Carbayin, a small electricity retailer in Asutrias, a single-province region in the north of Spain, has become the first in the country to offer specifically renewables power to its customers. Most of the electricity will come from wind plant. Carbayin's initiative is controlled by its 100% trading affiliate Electra Norte, a wind, solar and biomass developer. Electra Norte already has its first green power client, Canteras la Carda, a provider of sand to cement companies. The power trader is also negotiating further contracts with six other Asturian businesses.

"Nothing like this has been done before in Spain," says Luis Diaz, at the helm of both Electra Carbayin and Electra Norte. "As a small distributor, with around 4300 customers, we cannot compete on the scale of the large utilities," he explains. "But we can make ourselves a market niche in renewables."

The larger distributors and utilities behind the bulk of Spanish wind power are observing the green marketing initiative as they prepare for the next stage of Spanish power market liberalisation in January, when all electricity customers can choose their supplier.

Although Electra Norte buys all the power it markets from the national power pool -- a mix including nuclear, lignite, oil, coal and gas -- its entire generation, all from renewables, exceeds the total it trades within the pool. With no green electricity accreditation system in Spain, this is the basis of Electra Norte's claim to be a renewables supplier.

The company's ambitions are to eventually trade clean electricity anywhere in Spain. If successful, demand from its customer portfolio will begin to outstrip its own renewables generation capacity, posing the problem of how to offset "dirty" purchases from the pool.

Diaz admits that his team has not yet completely defined how it will cope with this contingency. The company is increasingly inclined towards of a system of special incentives paid to third party renewables generation. Under such a pioneering system, Electra Norte would pay a small incentive -- such as EUR 0.01/kWh -- to a series of small hydro, wind, photovoltaic solar or biomass suppliers at any point in the country. This payment would then enter Electra Norte's accounts to offset the difference between its own renewables production and its power purchases. The cost of the incentive will not be passed on to customers says Diaz, as it will be covered by the increased sales Electra Norte hopes to clinch as a renewable electricity merchant.

There are "many grey areas," Diaz admits. But for the time being Electra Norte has enough green production to meet expected demand. It has just got the go-ahead for 5.9 MW at Penouta in Asturias, expected online by summer 2003, and it holds an 8% share in regional wind developer Northeolic, which currently has 24.4 MW turning at the Pico Gallo wind plant and has just won approval for its 18 MW Bodenaya plant. Northeolic also has a further five wind plant in the pipeline.

Equity fund

Electra Norte is developing a further 25 MW of wind power on its own and is measuring winds at other sites in Asturias. Furthermore, the company aims to develop biomass and more photovoltaic power. It has operated 15 kW of PV panels since 2000, a project which marked Electra Norte's first stab at raising project equity locally.

As part of its strategy to promote social awareness and consumer loyalty to renewables, Electra Norte also plans to open an equity fund for the Penouta plant. Penouta has clinched a 100% project finance deal with the state-run energy efficiency agency, Institúto para la Diversificación y Ahorro de la Energía.

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