After the success of the last auction, the government already announced a few weeks ago that another auction of the same type would be held for new facilities. Finally, this will be held on July 26, according to the Minister of Energy, Alvaro Nadal.
During his appearance before the Energy Commission of the Congress of Deputies, Nadal explained that this new auction is being called after the one held on May 17, where some 3.000 MW were awarded, There was a demand of more than 9.000 MW, that is, more than three times the power offered.
New auction for July 26th
Minister Nadal highlighted the great reception that the May auction had, pointing out that three quarters of the 9.000 MW for new projects They offered the maximum possible discountThis fact prompted the ministry to organise a new auction to speed up compliance with the European agreements for 2020.
The ministry expects similar results in this auction, given that, with current technology, many facilities can already compete without the need for premiums and can rely on market prices, which represents a great opportunity for the sector. The Government's objective is to award another 3.000 MW, which will allow us to get even closer to meeting the European energy targets for 2020.
Auction conditions and benefits
Nadal recalled something that was key in the previous auction: the awards do not include premiums, but the projects will receive only market remuneration. However, the small print guarantees a minimum price of between 38 and 39 euros/MWh in the event of an exceptional drop in prices on the general market.
Current prices in the wholesale market are around €50/MWh, which makes it highly unlikely that this clause will be activated in the near future. This situation benefits both consumers and the awarded projects., by providing greater stability in the remuneration of renewable installations.
2020 Goal: Towards 20% renewables
According to Nadal, with the auction held in May, Spain would reach 18,9% of renewable energies in its energy mix. With the new auction of 3.000 MW, this percentage would rise to 19,5%, very close to the 20% target set by the European Union for 2020.
Spain would thus be among the European countries that would best meet their environmental targets for 2020. Despite this positive forecast, Nadal also noted that it is surprising that countries such as Germany install more photovoltaic capacity than Spain, despite the climatic and geographical advantages of our country for this technology.
Technological inequality and auction outcomes
The rules of the new auction will be the same as those of the previous one. In the event of a tie, the successful bidder will be determined based on the biggest discount offered and the highest number of expected operating hours.
During the May auction, this second criterion mainly favoured wind technology, which was ultimately awarded most of the auctioned capacity, and left photovoltaic technology in an unfavourable position with only 1 MW awarded. This fact caused the actors in the photovoltaic sector, such as the Spanish Photovoltaic Union (A F), lodged complaints with the courts and denounced the conditions of the auction.
The case of the Forestalia Group
At the May auction, one of the big winners was the Forestalia Group, which was awarded nearly half of the 3.000 MW available, specifically 1.200 MW. These projects will be developed mainly in Aragon, which reinforces this region's commitment to renewable energy.
Meanwhile, UNEF has already expressed its concern about a possible repetition of the results in the new auction, given that the conditions have not been modified. On this occasion, the wind technology appears to have an advantage over other forms of renewable generation, such as solar photovoltaics.
Complaints and problems in the photovoltaic sector
UNEF has denounced from the beginning that the previous auction was not technologically neutral. Although the Ministry of Energy insisted on this neutrality, the way in which the operating hours were calculated clearly favoured wind power over other technologies such as solar.
In this new auction, UNEF has taken its complaint to the Directorate General for Competition of the European Commission, arguing that the proposed rules prevent photovoltaics from competing on a level playing field, such as the limits on discounts applicable to initial investment.
In the previous auction, wind power could apply a maximum discount of 66,01%, while photovoltaic power was limited to 59,84%. This margin, together with the hours of operation, created a clear advantage for wind power.
Despite perceived inequalities in the photovoltaic sector, the auction on July 26 is seen as a key opportunity to increase Spain's renewable capacity without incurring extra costs for consumers and to make progress towards the European Union's climate goals.
With the restructuring of the energy model, the projects awarded in this auction will follow approximately the same market principles established in previous auctions, which will allow Spain remains a reference in clean energy generation at European level.