Interview: We meet Acciona Energy's CEO Rafael Mateo

“Five years ago we were fighting against the rest. Now there is no opposition to renewables. Everyone likes it. Everyone became renewable: the oil and gas industry, the gas utilities, the coal utilities, all of them. Today there is no loud opposition to renewables. It is mainstream.”

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Rafael Mateo, chief executive at Acciona Energy, is talking to A Word About Wind and sharing a view of renewables that looks a touch on the optimistic side.

Then again, it may reflect how far the developer, which is part of the Spanish utility Acciona, has come during the last five years. In early 2014, it reported a loss of €2bn after being hit hard by retrospective changes to wind subsidies in Spain.
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“We were a Spanish company with high exposure to the Spanish market,” he says. “Maybe because of that we suffered more than others when the regulations changed, because they were directed at old wind assets. In these last years, what we have done is to diversify.”‍

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Global spread

Acciona Energy now operates a 10GW portfolio of wind and solar assets, of which half is in Spain and half is in overseas markets including the US, Chile, Mexico and Australia.

Mateo says its portfolio is split 60:40 between solar and wind, and that it is looking to grow by 600MW each year of which around 80% is in the five countries above. It has also diversified to focus on a wider range of off-take deals, from short- to long-term with public and private buyers.

Mateo adds Acciona has also recently completed three solar projects with total capacity of 150MW in Egypt and a 44MW solar farm in Ukraine, which shows that it will enter markets outside of its core five. The company tracks 100 countries at present to see where this type of deal arises, but its core five are set to make up 80% of its investments up until 2024.

Like Acciona, the Spanish renewables market has not stood still.

After the despair when the subsidies were cut – and the damage this did to investor confidence – the market is now on the up once again. The country started to run renewable energy auctions again in 2018, and the growth of renewables looks set to continue after the centre-left Spanish Social Workers’ Party won the general election in April, albeit without an overall majority.

“The speed could be different but the trend is very clear. No more nuclear, no more coal, no more fuel… The mechanism needs to be decided but the direction is very clear,” he says.‍

Well balanced‍

One way that Acciona has been looking to support the growth of renewables in Spain is by using its wind farms to provide grid balancing services. In 2016, Acciona reached a milestone by becoming the first company to provide wind-only grid balancing services to the grid, and in September 2017 opened Spain’s first wind-and-battery storage plant. Mateo says that the intermittency of wind has not proved to be an obstacle to providing these services.

“Wind is intermittent but it is very predictable,” he says. “With a very good prediction, we can know the production for the next three days on an hourly basis with less mistakes than predictions of the demand… We can offer additional quality and flexibility to the system.”

Mateo says he expects utility-scale storage linked to wind and solar projects to be a big part of the renewables market within five years. Acciona is also linking its batteries to blockchain technology that enable it to show that the electricity it produces is from renewables. These technological advances mean that, for Mateo, “intermittency is not an issue”.

Another significant change in the market that Acciona is adapting to is the growth of power purchase agreements with corporate off-takers. Mateo says there is still a way to go for PPA deals to become attractive in Spain because buyers are not looking to lock in their electricity prices for the long-term, and sellers do not find the rates in these deals compelling enough.

“The buyer is not able today to buy for the next 15 years, because there is a lot of electricity in Spain and no planning around the prices of the future. The prices are not going up, or are going to be the same or lower, and so the buyers are not in the conditions of signing a PPA that is interesting for the seller. Today, PPAs are in the €40s but the market is in the €50s,” he says, adding that Acciona has been active in securing similar deals in Chile and Mexico.

This may provide an obstacle for developers and project owners that want to take schemes to financial close. However, Mateo adds that gaining finance is generally not an obstacle for developers: “Finance is not an issue for renewables because there is no risk of technology, no risk of pricing, no risk of dispatching, and it is not subject to the same volatility as the fuel prices. It is very easy for investors to secure a stable yield for the next 30 years,” he says.

In Mateo’s decade at Acciona, and his 22 years at Endesa before that, he has seen plenty of ups and downs in the renewables sector. It would be easy to call his synopsis of widespread support for renewables overly optimistic but, even if it is, we can’t begrudge him that.