Prospex Energy kick-starts solar projects as Spanish electricity prices rocket
The installation work was approved by Tarba earlier this month and is expected to be completed by the end of July 2022. The installation of solar panels on the roof of the El Romeral power plant under 'Project Apollo' is expected to result in increased sales of electricity.
The cost of installation is less than €50,000 and has been financed from existing funds held by Tarba, and payback from this investment is estimated to be approximately four years.
In total, the company will install a total of 83 photo-voltaic panels in three separate zones on the El Romeral power plant roof giving a total installed peak capacity of 41.5 kWh. With the sunny climate of Andalusia, this is expected to generate 66 MWh in the first year.
Energy generated from the installation will feed the plant's ancillary services thus covering part of the plant's electricity demand during daylight hours and in turn allowing increased electricity sales.
Meanwhile, front-end engineering and design ('FEED') studies - an approach adopted prior to detailed engineering, procurement, and construction and after the completion of a feasibility study - for a second project, Project Helios, were approved by Tarba earlier this year and have now commenced.
Project Helios will involve the company installing photo-voltaic panels on land adjacent to the plant, it explained to investors. The capacity of Project Helios is expected to be in the region of 5 MW and the cost of FEED studies is expected to be €50,000, which is also being financed from funds held by Tarba.
The total cost of the second project is being defined but is expected to be covered by future cash flows from El Romeral augmented by project finance and Tarba is currently assessing land options and undertaking an initial environmental assessment for the upcoming project.
Prospex Energy says the El Romeral power plant, which is now operating 24 hours a day, seven days a week as its default operating mode in a move to optimise the overall revenue continues to provide a very healthy income from selling electricity on the spot market in Spain.
Both solar projects are expected to take full advantage of the existing connection to the power grid at El Romeral which it says has ample capacity to take the increased generation output.
Following the gas price cap instituted by the Spanish government as of mid-June, daily electricity prices are expected to average €150/MWhr for the coming 12 months, it said.
Having identified the opportunity for solar co-generation last year, CEO of Prospex Energy, Mark Routh, said “it is extremely satisfying to be proceeding with the two projects which increase the sale of electricity and boost the ESG credentials of Tarba and its owners.”
He explained to investors: "The installation of solar panels on the roof of the El Romeral power plant is a very fast and cost-effective way to increase our income at the plant whilst we await the approvals to drill further wells on the El Romeral production concessions.
"The installation of a solar farm adjacent to the plant will take longer and will be of greater scale but indications are that it will be value accretive and will enjoy short payback, made easier because of the existing grid connection and ample export capacity at El Romeral.
"Since the gas available from the producing wells on the El Romeral concessions allows just one of the three generators to be active at a time, the plant is at just 30% of capacity. Receiving the permits to drill just two of the many identified structures on the existing concessions can take the capacity of the plant back to 100% of its design capacity."
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The El Romeral plant is now running 24 hours a day 7 days a week following optimisation and automation carried out by Tarba at the end of 2021, allowing Prospex to benefit from the unprecedented rise in electricity prices, Mark Routh, Prospex’s CEO informed investors.
Since revenues generated by El Romeral had been at an all-time high as a result of recent electricity prices, the switch to almost continuous operations is expected to boost revenue.
Last month, the price of electricity in Spain stood at unprecedented levels at more than six-times what it was back in March 2021 when the El Romeral project was acquired.
Looking ahead, Prospex said Tarba is set to increase power generation capacity at El Romeral as soon as it secures permits to drill further infill wells on the site’s concessions.
While Prospex has pledged its support for the drive to renewable energy, it also recognises that natural gas will be required to contribute to the energy mix during the transitional period, “and that local indigenous onshore gas is the optimum source to meet this need.”
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