The influx of applications also far outstrips Spain’s predictions for future energy demand. The country’s National Energy and Climate Plan allows for 55 gigawatts of renewable energy development up to 2030, which equates to around four months’ worth of solar applications at the current rate.

Fragility of a revived market

The rush to file applications follows changes in government that have restored investor confidence in the market, along with a growing appetite for corporate power-purchase agreements (PPAs) and merchant plants.

The changes have helped push Spain to the top of the European rankings for solar installations in 2019. Industry body SolarPower Europe expects the country to install more than 4 gigawatts this year, up from 288 megawatts in 2018, pushing it ahead of Germany.

But the rush for grid applications is beginning to echo Spain’s first solar bubble, which started with an overly generous feed-in tariff in 2007 and ended up almost bankrupting the country in 2010, leading to retroactive cuts that paralyzed the renewables industry for almost a decade.

For now, the risk is still contained because most investors have not got beyond the grid-connection application process, which is relatively easy. Applicants are not even required to have a viable plant plan.

This is thought to have led many speculative investors to seek a grid connection approval so they can sell it to a developer later on.

According to press reports, a grid connection authorization could change hands for up to around 100,000 euros ($112,000) per megawatt for utility-scale plants in some of Spain’s autonomous communities.

The CNMC wants to put a halt to such practices by imposing stricter requirements and time limits on the application process. For example, developers will have just 12 months to present an environmental impact assessment and 48 months to get authorization. Similarly, developers that are unable to meet the strict schedule requirements would have up to six months to forfeit their projects and will get their deposits back.

Alongside these measures to make sure applications are backed by viable projects, the CNMC is aiming to cut red tape.

Jenny Chase, head of solar analysis at Bloomberg New Energy Finance, said interest in building solar in Spain was being bolstered by favorable levelized cost of energy (LCOE) economics in the country.

“The Iberian market as a whole has spot market prices for power that are above solar LCOE,” she said.

This is prompting developers to eschew government auctions and take a chance on the spot market as a source of income for plants, said Chase.

“There are a couple of gigawatts of projects that are going to be built in the next couple of years without being part of the auction program,” Chase observed. “Very few of them have long-term PPAs.”

In line with SolarPower Europe’s estimations, Bloomberg New Energy Finance expects to see between 4.1 gigawatts and 4.9 gigawatts of solar installed in Spain this year, dropping to between 1.6 gigawatts and 2.5 gigawatts in 2020, and then rising slightly to between 1.7 gigawatts and 3 gigawatts in 2021.

“Spain has recovered remarkably well from a disastrous feed-in tariff followed by retroactive cuts,” Chase said. “It’s now perceived as being a bankable market.”

The question now is how long the regulator can keep it that way.