According to forecasts, the quota will be filled with the Higher percentage possible discount with respect to the cost of the investment.
The third major renewable energy auction and its regulatory framework
On Wednesday, July 26, 2017, the Government held the third major renewable energy auction, with which it hoped to almost fully meet the objectives of the European Union's 2020 plan. In this auction, 3.000 megawatts (MW) of renewable energy were put into play. power between wind and photovoltaic energy projectsThe Ministry of Energy left open the possibility of expanding this capacity based on the Ministry's own discretionary criteria.
The context in which this auction took place was marked by a variety of factors, both legislative and economic. Since the 2012 moratorium on the installation of new renewable power, the sector had been undergoing a notable transformation driven by the review of the remuneration regime. The premium system had been abandoned in favour of a Reasonable remuneration over the useful life of renewable installations.
The regulatory framework was completed with specific standards such as the Royal Decree 960 / 2020 and Order TED/1161/2020These established the economic regime for renewable energy, known as the “renewable energy economic regime (REER)” and the auction calendar, respectively. In this sense, the 2022 auction for technologies such as biomass and distributed solar PV reflects the importance of renewable energy as an economic and social driver, especially in rural areas.
Results of previous auctions and expectations for the third edition
In the two previous auctions organised by the Government, a significant volume of megawatts had been allocated to Forestalia. This company was the big winner in both the first and second auctions, and it was also expected to participate in the third call for tenders.
In the previous auction, held in May 2017, 2.000 MW were offered, which could be extended to 3.000 MW if prices were competitive. Ultimately, the assigned capacity exceeded the aforementioned 2.000 MW, which was a success in terms of competitiveness. Gamesa, for example, achieved 206 MW, while Gas Natural Fenosa was awarded around 600 MW, and Enel Green Power Spain, a subsidiary of Endesa, was awarded another 500 MW.
Not all great actors were successful. Iberdrola, despite being one of the main players in the renewable energy market, was unable to win any of the blocks in which it had participated in the bidding.
The debate: wind or photovoltaic?
One of the most controversial points of this third auction was the competition between wind and photovoltaic energy. While in the previous auction solar energy received only 1% of the MW allocated, this time it was expected that solar projects would finally come into play with greater importance. Despite this, there was a consensus that what analysts called "competitive pressure" would be repeated. As several associations of the photovoltaic sector denounced, the auction's tie-breaking system favoured projects that generated electricity for more hours, a criterion that inevitably benefited wind energy.
The impact of the auction on solar energy
The solar PV sector, which had until then been marginalised in terms of installed capacity, was faced with a new scenario. PV associations were strongly critical of the bidding system, which severely limited their options with respect to wind energy. However, for this third auction, one of the elements that would play in favour of PV was the scarcity of wind projects capable of offering competitive discounts. It was estimated that there were barely 1.000 MW of wind energy left with enough capacity to compete in terms of prices, which opened the door for around 2.000 MW of PV to enter the game.
Forestalia's role in the third auction
As we have mentioned previously, the Aragonese company Forestalia Forestalia has emerged as one of the major players in previous renewable energy auctions. Founded in 2011, but with a vast business track record in the field of renewable energy since the 90s, Forestalia has multiple projects in the field of wind energy and energy crops, both within Spain and in other European countries.
One of Forestalia's biggest projects is the construction of the largest pellet and chip factory in the country, located in the Aragonese town of Erla. In addition to its fundamental role in wind energy, Forestalia has also invested in other renewable energy sources, such as biomass, with projects in Aragon, the Valencian Community and Andalusia.
The auction under the magnifying glass of the National Court
The transparency of the auction process has not been without controversy. The issue was brought before the National Court by the Spanish Photovoltaic Union (Unef), which filed a claim with the Supreme Court alleging that the system openly favoured wind energy, in what should have been a neutral auction between the different renewable sources. The Supreme Court, for its part, decided to send part of the file to the National Court so that it could analyse the auction and, more specifically, the ministerial resolution issued by the Ministry of Energy.
The advancement of biomass in auctions
The third auction of 2022 stood out for the strong commitment in manageable technologies such as biomass energy. During the call for tenders, contracts were awarded 146 MW of biomass, a technology that, although it usually offers slightly higher prices than photovoltaic or wind power, has the advantage of being manageable. In other words, biomass has the capacity to produce energy regardless of weather conditions, which makes it a much more valuable asset for the stability of the electrical system.
The average price of biomass awarded in this auction was € 93,09 / MWh, with a maximum of € 108,19 / MWh and a minimum of €72,38/MWh. Among the successful bidders were major players in the sector such as Acciona (50 MW), Reolum (46 MW) and hunosa (50 MW).
Distributed solar photovoltaic energy: a commitment to local participation
One of the most positive surprises of the third auction was the award of 31 MW to distributed photovoltaic solar energy projectsThis technology, which is halfway between self-consumption and centralised generation, has been a great success in terms of citizen participation and local management. These are smaller systems, with powers of less than 5 MW, which allows them to be integrated into the low-voltage electricity grid and generate social and economic added value when implemented in urban or rural areas close to consumption centres.
The maximum price awarded for distributed photovoltaic energy was € 62,5 / MWh, while the minimum was €44,98/MWh. MITECO highlighted the importance of this technology to democratise the Spanish electricity system, encouraging the participation of citizens and small businesses, who can benefit from self-consumption models.
- Acciona and Reolum lead in biomass with awards of 50 MW and 46 MW respectively.
- 31 MW were awarded to local distributed solar photovoltaic energy projects.