Telefónica and Repsol form solar JV

When it comes to expanding into adjacent markets, the future is looking bright for Telefónica.

The Spanish incumbent on Thursday formed a 50-50 joint venture with energy giant Repsol that plans to offer solar power products to business and residential customers, including individuals and neighbourhood communities.

The new company will combine Telefónica’s sales and distribution channels, and its technology know-how, and Repsol’s experience in supplying power from multiple sources including renewables such as solar. Together, they plan to offer competitively-priced installations that come with remote monitoring capability and various other value-added services. It will also offer financing for customers that might struggle with the upfront cost of solar panels.

“This is a strategic agreement between two leading companies that contribute their knowledge in two fundamental aspects to build a solid and innovative value proposition for both individuals and companies; on the one hand, connectivity, and on the other, the installation and management of solar photovoltaic panels to take advantage of solar power,” said Telefónica Spain chairman Emilio Gayo in a statement. “Our customers, in addition to efficiently managing their expenses and saving money, will be contributing to creating a more sustainable society.”

In 2019, the Spanish government presented its Strategic Energy and Climate Framework, which includes the National Integrated Energy and Climate Plan 2021-2030. By the end of the decade, Spain wants to reduce the country’s greenhouse gas emissions by up to 21% compared with 1990s levels. It also wants 42% of energy consumption to come from renewable sources, while in terms of electricity generation, it wants renewables to account for 74%.

In addition, like many countries, Spain saw a huge spike in electricity prices last year, causing a worrying rise in people’s energy bills. In response the government introduced a new three-tier tariff system that offers peak, low and intermediate pricing depending on the time of day, in an effort to help the public save on their bills by planning their consumption more carefully. However, with energy costs still rocketing, the government was also forced to adopt emergency measures to channel profits from energy firms back to struggling consumers.

Against this backdrop, in a country that enjoys as much sunshine as Spain, solar panels offer an attractive means of taking the sting out of energy bills and helping the country hit its environmental targets. By extension, it’s a potentially lucrative opportunity for a player like Telefónica to capture a share of the spoils.

As for Repsol, it currently serves 1.35 million electricity and gas customers in Spain. Last October, it set a target of generating 20 Gigawatts of electricity from renewable sources by 2030, a 60 percent increase on its previous target.

“This important partnership shows both companies’ commitment to the consumers, who increasingly want to be part of the energy transition by producing their own energy. Both companies also open the way for us to explore additional solutions within this alliance to expand the value of our current customer proposal,” said María Victoria Zingoni, executive managing director of client and low carbon generation at Repsol.

The joint venture with Telefónica will have its own management, sales and customer service teams. Telefónica said it is due to begin operating “in a few months”, subject to regulatory approvals.