Andalucia opens door to massive development -- Electricity network bottleneck cleared up to 3000 MW

Network access has been cleared for up to 3000 MW of wind power stations in Spain's huge southern region of Andalucia. Most of that capacity -- more than is being built in the entire country in 2004 -- is expected to be up and running within two years. The 3000 MW will make a substantial contribution to Spain's bid to rival the United States next year as the most dynamic wind market in the world.

Grid clearance has so far been given to 835 MW of wind projects in Andalucia that are ready to build, while connection concessions for a further 1647 MW will be granted before the end of the year. "We can expect the best part of 3000 MW to be turning by the end of 2006 and at least 500 MW should go up over 2005 using already available capacity on local distribution networks," says an Andalucian energy department official. The regional government has yet to produce its official statement on the network decisions.

"Direct connection to the transmission network is a bit more complex and one or two areas require major work, including new substations and extensive high voltage power lines. But in many cases we're talking about quite simple jobs: a few step-up transformers and relatively short power lines," he adds. Meanwhile, the Andalucian government, the Junta de Andalucia, is negotiating with national grid operator Red Eléctrica de España (REE) to extend the concessions being granted this year by a further 1000 MW.

Blocked access to the electricity network has been the largest obstacle to Spanish wind development in recent years. Even so, the more than 7000 MW operating in Spain today makes it the second largest wind market after Germany, with the US trailing in third place.


Andalucia's connection concessions end a process started by the Junta in 2002 to solve the regions' grid bottleneck and revitalise what was once a pioneering wind region. Much of the 232 MW operating in Andalucia today was installed almost a decade ago. Development in Andalucia dropped to a crawl in the late 1990s as the Junta struggled to cope with applications for connection of 10,000 MW. Since then extensive work has been put into zoning plans. The result is that the Andalucian wind target, which two years ago was set at 2400 MW by 2007, is likely to be both reached and exceeded ahead of time.

In agreement with REE, the Junta's new regulation establishes a grid connection concession of 2482 MW across five grid zones, known as the Zonas Eléctricas de Evacuación (ZEDE). The ZEDEs mainly cover mountainous inland areas of the state's windy coastal provinces, including Malaga, a popular destination for second home owners, particularly among north Europeans.

The Junta gave wind project developers more than a year to join the zoning plan and to produce the required deposit of EUR 20,000 for each MW they were intending to connect. By April this year, ZEDE applications totalled 8000 MW. At least 4000 MW will not see the light of day -- even more if the Junta fails in its attempt to negotiate an extension of the ZEDEs with REE.

Once the Junta gives its starting orders for formal negotiations within each ZEDE to begin, developers have just ten days to draw up a list of project connection priorities. Failure to agree results in the Junta making the decisions, based mainly on each project's viability, efficiency and how ready it is to build.

No messing

Since the summer, the starting pistol has fired on four ZEDEs totalling 1707 MW -- and the Junta has been true to its word. In July, developers failed to agree on priorities when the ten day negotiation period closed on 835 MW across the ZEDEs for Huelva province (460 MW) and for the Huéneja grid zone (375 MW), on the provincial border between Granada and Almería. The Junta immediately ruled on connection priorities for the full 835 MW and, at a stroke, ousted 1275 MW of unsuccessful projects.

The successful developers must now agree on how to pool resources to pay for joint network infrastructures to feed power into the grid. With a deadline for plant commissioning by end-year 2006, developers must act quickly. If they fail to agree, the Junta will impose investment obligations "within a question of months," according to regional government sources.


Failure by developers to negotiate priorities in two other ZEDEs has been treated less ferociously by the Junta. Grid connection is being sought for 275 MW in Granada and for 59 MW in Tajo de La Encantada, a grid zone stretching from Lucena in Córdoba in the north, through the Malaga mountains and Ronda Valley to the border with Cadiz. Negotiations opened in September and, reportedly, all but one of the developers agreed on priorities within the ten day deadline. The Junta granted an extension of the deadline for further deliberation, but was due to intervene if there was no agreement by the end of last month. Losing candidates in Tajo de La Encantada may get a second chance if REE agrees to an 800 MW extension to this ZEDE.

The Junta also postponed to November 30 the start of negotiations for the 775 MW Arcos ZEDE, covering Cadiz province. Developers in Cadiz were close to agreement last month and the Junta hoped the extra time would allow them to finalise priorities without its intervention. The Junta is also negotiating with REE the opening of a sixth ZEDE, capped at 250 MW, for the province of Almería, where projects for over 1000 MW are stumped for lack of sufficient grid capacity.

Gamesa benefits

Gamesa, both a project developer and wind turbine manufacturer, is the main beneficiary of the ZEDEs so far resolved (Huelva and Huéneja), landing connection concessions for 310 MW across the two zones. Uniwindet, the wind development arm of Unicaja, a regional savings bank, is second with 223 MW, followed by a local consortium called EME Dólar with 200 MW.

In the three ZEDEs yet unresolved, utility Endesa -- which is also the regional electricity distributor -- tops the bill with 688 MW under negotiation. Gamesa comes a close second negotiating a further 372 MW. Other main players include Dutch power marketer Nuon, through its Spanish branch Desarrollos Eólicos (DESA); Germany's P&T Technologies; and Danish power group Energi E2 together with Spanish companies Corporación Eólica and Preneal. Regional consortiums HN Generación Eólica and Wind Ibérica are also negotiating large slices of the pie.