The renewable energy sector in Spain is facing a financial challenge that could shape the future of the industry. The progressive decline in the pointing indexes, especially in photovoltaics, has impacted the revenues captured by these technologies in the market, reducing their attractiveness to banks.

“We are seeing how financial institutions are becoming increasingly cautious, and in the near future, they will stop financing renewable projects that rely solely on the market,” warns Rodrigo García Ruiz, Energy & Risk Management Analysis Manager at Optimize Energy.

In an interview with Energía Estratégica España, he notes that “banks will tend to stop financing merchant projects, requiring that projects come with an attractive PPA in hand.”

Pointing indexes and their impact on project viability

The pointing index, which measures the relationship between the price captured by a technology and the market’s average price, is a key metric for evaluating the competitiveness of renewable energies.

According to data from Optimize Energy, photovoltaics have shown a concerning trend, with indexes dropping from nearly 1 in 2020 to between 0.85 and 0.66 in 2023 and 2024.

This represents a loss of revenue ranging from 15% to 34% compared to the market average price, which particularly affects merchant projects, meaning those without price coverage.

The situation is different in wind energy, which has maintained a more stable pointing index, fluctuating between 0.9 and 1.0 during the same period.

The data from the price captured chart in the Spanish market indicates that, unlike photovoltaic, wind energy continues to capture prices close to the market average, allowing for greater stability in its revenues.

However, García Ruiz warns that “even though wind energy is better positioned, banks now require PPAs or long-term contracts to mitigate any future volatility.”

The hope of storage

In the face of this scenario, storage emerges as a crucial solution to improve the pointing of photovoltaic energy, as it allows photovoltaic plants to sell electricity at times of higher prices, helping to counteract the loss of revenue associated with low pointing indices.

“Storage is key to stabilizing revenues and could be an attractive option for photovoltaic plants to regain financial interest,” explains García Ruiz.

Its participation in system balancing services (SSAA), designed to balance supply and demand of electricity in real-time, offers additional income opportunities that can complement spot market revenues.

However, implementing these solutions also requires investments and long-term planning, which, according to the analyst, “is not always within reach for smaller projects or those without solid financial backing.”

Future prospects: an increasingly selective investment

The projections mentioned in the publication suggest that the challenge for photovoltaic could intensify in the coming years.

As solar capacity is added to the system, it is likely that pointing will continue to decline, particularly affecting the prices captured in spring and extending this trend throughout the second quarter.

“For 2025 and 2026, photovoltaic is likely to face even greater profitability issues without adequate leverage,” García Ruiz explains, highlighting the importance for developers to consider secure revenue alternatives.

The trend of financial institutions not only affects new projects but also those that currently operate under the merchant model, which will now need to adapt or assume market risks.

For García Ruiz, “this demand for income stability is a sign that the sector is professionalizing and moving toward models less exposed to market volatility.”

In this context, the evolution of renewable project financing in Spain suggests that the sector’s growth will become increasingly selective and will depend on developers’ ability to secure long-term contracts or incorporate storage solutions to mitigate price risks.