The Ministry of Energy has reduced the maximum amount of investment aid that winning projects in the upcoming renewable energy auction will receive: 11% for wind power and double that for solar photovoltaic energy (22%) . Wind power projects will also see an increase in the number of operating hours they must operate to receive the full amount of aid.
In the final text, the remuneration parameters of some reference plants have been changed, with which the contestants will have to compare their projects when making their bids, because they will receive the aid based on that comparison.
While the draft proposal considered a maximum return on investment for photovoltaics of €50.507 per MW installed, it is now €39.646 per MW, a 22% decrease; for wind power, it has fallen from €53.623 per MW to €47.684 per MW, an 11% reduction . Returns have also decreased for other technologies, which have no prospect of profiting.
Lower operating costs
Other parameters have also changed, such as the operating costs of the power plants – 2,5% in the case of wind power and 0,5% in the case of photovoltaic power – or the number of hours of operation of wind energy, which have gone from 2.800 hours per year to 3.000 hours.
As a result, while wind power previously won when bidders offered discounts on incentives of less than 26,4%, it now only wins if the discount offered is less than 6%; beyond that point, solar power wins.
However, if the bidders bid so low that they tie, waiving the aid , the award will go to the projects with the most operating hours, giving an advantage to wind power, since photovoltaics has 2.367 hours per year.
This award criterion has angered a solar industry association , Unef, which has asked the Supreme Court to suspend the competition due to discrimination.
Less help
On the other hand, as the number of operating hours of wind power increases, the volume of aid will decrease , since if the awarded plants do not reach that level of operation, the incentives decrease proportionally.
However, the latest modifications haven't significantly altered the employers' association's forecasts, as bids with the maximum discount are expected, effectively eliminating the need for subsidies. In reality, bidders will be vying to enter the regulated market because they will be guaranteed a minimum revenue from the electricity market, which will allow them to finance their projects.
Old news: UNEF asks the TS to suspend the auction of renewables
The Spanish Photovoltaic Union (UNEF) decided this Friday, in an extraordinary meeting, to request the Supreme Court to apply precautionary measures to suspend the upcoming renewable energy auction . According to its director general, José Donoso, the request is based on the fact that the mechanism being prepared by the Government, outlined in draft ministerial orders and resolutions , heavily favors wind power, thus contradicting the principle of technological neutrality established in the royal decree on the auction published a few days ago.
“The general perception is that there is significant discrimination against photovoltaics, since the auction conditions do not allow this technology to achieve the level of competitiveness it has reached from an economic point of view,” Donoso explained.
The auction mechanism limits the discounts offered by interested parties, which increases the probability of a tie , giving wind power an advantage, in their view, in a tie-breaking procedure because it rewards projects with more operating hours, which breaks with the principle of technological neutrality established by the Ministry of Energy itself.
Just yesterday, the department headed by Álvaro Nadal approved the ministerial order regulating this auction, which is expected to take place at the end of April or the beginning of May, for 2.000 megawatts (MW) of renewable energy capacity, expandable by an additional 1.000 MW if the auction results offer competitive prices. The auction will be conducted using an efficiency mechanism, so that projects with the lowest costs for consumers will be awarded. According to the Energy Ministry, it will be technologically neutral, “allowing different renewable technologies to compete on equal terms . ”
