Key Takeaways
- Most rated Spanish photovoltaic (PV) plants have demonstrated strong operational performance between the initial rating assignments and 2023. On average, they slightly exceeded their one-year P90 production estimates. The outperformance is the consequence of the PV technology's strong track record and diversification.
- In contrast, rated concentrated solar power (CSP) plants in Spain on average underperformed their one-year P90 production estimates and displayed more volatility in their production. These resulted mainly from unexpected key equipment issues and, more recently, curtailments.
- We believe curtailments could intensify over the coming years, given the expected significant increase in solar capacity in Spain. At the same time, we expect solar capture prices will decrease.
- In our view, one-year P90 production estimates will remain the best proxy to forecast the performance of rated Spanish solar plants. We believe one-year P50 and P75 production estimates overstate future production for our rated portfolio.
Adherence to production estimates is key when forecasting renewable energy projects' revenues. In this report, we compare rated Spanish solar plants' actual performance with their one-year P50, P75, and P90 production estimates, which have a probability of 50%, 75%, and 90%, respectively, of being reached in any given year. While these projects are mostly subsidized, meaning production performance has a limited effect on revenues, their production allows us to analyze some of the credit trends we see across solar renewable projects.
Table 1
| Our Spanish solar portfolio | ||||||||
|---|---|---|---|---|---|---|---|---|
| Technology | Overall installed capacity (MW) | Number of plants | ||||||
|
Anselma Issuer S.A. (Anselma) |
PV | 35.3 | 18 | |||||
|
Desarrollos Empresariales Trafalgar S.A. (Desarrollos) |
PV | 55 | 23 | |||||
|
Enersol Solar Santa Lucia S.A. (Enersol) |
PV | 38 | 9 | |||||
|
FSL Issuer S.A.U. (FSL) |
PV | 65 | 9 | |||||
|
Sonnedix Finance S.A. (Sonnedix) |
PV | 87.7 | 42 | |||||
|
Técnica Universal Solar S.A. (Técnica) |
PV | 8.8 | 6 | |||||
|
Hypesol Solar Inversiones S.A.U. (Hypesol) |
CSP | 100 | 2 | |||||
|
Solaben Luxembourg S.A. (Solaben) |
CSP | 100 | 2 | |||||
| CSP--Concentrated solar power. MW--Megawatt. PV--Photovoltaic. Source: S&P Global Ratings. | ||||||||
PV Performance Has Been Strong
Chart 1
Most rated Spanish PV plants demonstrated a strong operational performance between the initial rating assignments and 2023, with real production exceeding one-year P90 estimates by an average of 0.6% and a high weighted average availability of 98.6%. The outperformance stemmed from overall reliable one-year P90 estimates, the PV technology's strong track record, and diversification. The latter comes from the use of different module and inverter manufacturers, as well as the sites' geographical spread. Diversification can help mitigate adverse weather events and unexpected operational disruptions that only affect one plant. In our view, production estimates for solar irradiance are more reliable than those for wind energy. Still, performance for the PV portfolio has not been uniform. In a given year, individual projects' production levels--which differed because of occasional problems in the case of some projects and overperformance in the case of others--deviated by -10% to 9% from one-year P90 estimates.
An effective replacement or repair strategy for ageing inverters is key for stable production estimates for PV plants. This is because we believe inverters will need to be replaced at least once during rated Spanish PV plants' operational lifespan, which is 30 years. Some rated PV plants replace entire inverters--mostly those operating obsolete models--while others only change or repair specific components to increase their useful life. In both scenarios, an effective replacement or repair strategy is key to prevent operational disruptions. In the case of the Spanish portfolio, the replacement and maintenance of inverters were within the scope of the operation and maintenance agreements at the end of 2023. Therefore, most of these financings do not have a reserve account to protect cash flows from the volatility introduced by the replacement profile of inverters.
As installed solar capacity in Spain rises over the coming years, we expect curtailments will increase. Curtailments have not significantly affected most rated PV plants until year-end 2023--with the exception of FSL in 2022 and 2023. However, as we do not expect that electricity demand in Spain will increase at the same pace as electricity supply, we believe this trend could change over the coming years. We therefore expect that curtailments will intensify and that they could differ significantly, depending on the plants' geographical location and the saturation of their individual electrical lines. We assume curtailments will reduce yearly production estimates for rated Spanish PV plants by 2% from 2024. We note that the installation of the system for automatic reduction of capacity (SRAP), which allows for real-time connection with the grid operator, can mitigate potential preventive curtailments and that some of the largest plants that could be affected by curtailments have installed it across the portfolios.
Another effect of the increase in installed solar capacity is that solar capture prices will decline because of price cannibalization. In 2023, rated Spanish PV plants' solar capture rates--defined as solar capture price divided by Spain's average electricity price--declined to 80%, from about 90% in 2022, for all Spanish plants under the subsidized remuneration regime. The solar capture rates for individual projects were broadly similar in 2023. In our view, solar capture rates will decline further over the coming years.
Chart 2
Enersol, Desarrollos, Sonnedix, and Técnica on average exceeded their one-year P90 production estimates, while Anselma and FSL did not. Enersol and Desarrollos never underperformed their one-year P90 production estimates, and Sonnedix and Técnica only underperformed them in 2022. FSL's production has been affected by low solar irradiance, module failures, and curtailments. The latter reduced production at two adjacent plants and resulted in an overall production decline of 3.6% in 2023 and 4.2% in 2022. Anselma's production has suffered from low solar irradiance, occasional inverter outages, cable thefts, and, to a lesser extent, curtailments.
Chart 3
We believe one-year P50 and P75 production estimates overstate future production for our rated portfolio. Under normal conditions and under our base case, one-year P90 production estimates will remain, in our view, the best proxy to forecast the performance of rated Spanish PV plants. Our performance analysis revealed that rated Spanish PV plants' real production fell short of one-year P50 estimates by an average of 4.3% and of one-year P75 estimates by an average of 1.5%. We think the likelihood of projects achieving their one-year P50 and P75 production estimates is, in fact, lower than 50% and 75%, respectively. For example, in only 12% of the observations, rated Spanish PV plants achieved their one-year P50 production estimates and in only 32% of the observations, they met their one-year P75 production estimates.
CSP Plants Have Faced Hiccups
Chart 4
Rated Spanish CSP plants' production was more volatile than that of their PV peers and fell short of one-year P90 estimates. This was mostly due to unexpected operational issues, and curtailments. In the past, rotary joints and blades in steam turbines had to be replaced and rotors in steam turbines needed to be repaired. We do not expect these operational issues will impair production again to the same extent. More recently, production also suffered from curtailments as CSP plants currently do not enjoy priority energy dispatch. This means CSP plants will be curtailed before PV plants in case of excess electricity in the system, which, in our view, will affect CSP plants' future production. In general, CSP plants' production was more volatile than that of PV plants and differed by -25% to 11% from one-year P90 production estimates in a given year.
Chart 5
We believe curtailments for Spanish CSP plants will intensify as they do not currently enjoy priority energy dispatch. Electricity capture prices remain similar for CSP and PV plants, but curtailments are a differentiating factor. Hypesol was subject to significant curtailments of 15.2% in 2023 and 23.1% in 2022, while Solaben's electricity output was curtailed by 2.7% in 2023--the year SRAP was installed--down from 9.4% in 2022. The grid network in Ciudad Real, where Hypesol is located, is saturated, which is the reason why Hypesol's performance is worse than that of Solaben. Hypesol's case demonstrates that the identification of regional bottlenecks will play an increasingly important role in curtailment estimations. As such, our base cases for Solaben and Hypesol include curtailment assumptions of 4% and 15%, respectively, from 2024.
Related Research
- Anselma Class A SPUR And Class B Issue Rating Affirmed At 'BB'; Off CreditWatch Negative; Outlook Negative, March 12, 2024
- Outlook On Sonnedix Finance's Debt Revised To Stable On Updated Remuneration Parameters; 'BBB' Rating Affirmed, Dec. 18, 2023
- FSL SPUR Lowered To 'BB-' On Heightened Financial Pressure; On Watch Negative; 'AA' Issue Rating Affirmed, Dec. 16, 2023
- Anselma Class A SPUR And Class B Issue Rating Lowered To 'BB' And Placed On CreditWatch Negative, Dec. 15, 2023
- SPUR On Hypesol Solar Inversiones S.A.U.'s Debt Affirmed On Updated Remuneration Parameters; SPUR Outlook Still Negative, Dec. 14, 2023
- Outlook On Solaben Luxembourg's Debt Revised To Stable From Negative After Remuneration Update; 'BBB+' Rating Affirmed, Dec. 14, 2023
- Tecnica Universal Solar S.A.'s Debt Affirmed At 'BBB-' On Updated Remuneration Parameters; Outlook Remains Negative, Dec. 14, 2023
- Desarrollos Empresariales Trafalgar S.A. SPUR Affirmed On Updated Remuneration Parameters; SPUR Outlook Still Negative, Dec. 13, 2023
- Enersol Solar Santa Lucia S.A. SPUR Affirmed On Updated Remuneration Parameters; Outlook On SPUR Still Negative, Dec. 13, 2023
This report does not constitute a rating action.
| Primary Credit Analyst: | Diva Costa, Madrid + (0034)917887230; diva.costa@spglobal.com |
| Secondary Contacts: | Livia Vilela, Madrid + 34 91 423 3181; livia.vilela@spglobal.com |
| Gonzalo Cantabrana Fernandez, Madrid + 34 91 389 6955; gonzalo.cantabrana@spglobal.com | |
| Elisa Suarez, Madrid +34 914233223; elisa.suarez@spglobal.com | |
| Francesco Gargiulo, Milan +39 02 7211 1231; francesco.gargiulo@spglobal.com |
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