The next renewable energy auction in Spain

Under the current Renewable Energy Economic Regime (REER), the Spanish Ministry for Ecological Transition and the Demographic Challenge (MITECO) has announced the third and fourth renewable energy auctions in Spain for 25 October and 22 November 2022, respectively. In this post we’ll go over the key information for this can’t-miss date on our calendars.

The Spanish National Integrated Energy and Climate Plan (PNIEC) plans to install 60 GW of renewable energies in an effort to provide 74% of Spain’s electricity from these sources, helping to reduce one out of every three tonnes of greenhouse gases currently emitted. According to MITECO, REER auctions are a cornerstone of the strategy to achieve these goals by 2030.

EVERYTHING YOU NEED TO KNOW ABOUT THE THIRD AUCTION

CAPACITY

This time, the auction is slightly larger than the previous one, with a total of 520 MW up for grabs. This capacity will be distributed as follows:

• 140 MW for distributed solar PV for installations smaller than 5 MW for local use.

• 220 MW for solar thermoelectric energy (hybridization with solar photovoltaic, biomass or biogas is allowed as long as the photovoltaic does not exceed 10 % of the thermoelectric capacity).

• 140 MW for biomass (100 MW for large installations and 40 MW for plants smaller than 20 MW).

• 20 MW for other technologies including new geothermal, hydrothermal, aerothermal, wave, tidal, hot dry rock, ocean, ocean energy, hydropower, bioliquid, biogas plants and for existing modified hydropower plants.

AUCTION CALENDAR

PRIORITIES 

One of the priorities of the Spanish National Integrated Energy and Climate Plan (PNIEC) 2021-2030 is to incorporate robust and manageable renewable technologies that provide the flexibility needed to achieve a high degree of penetration of non-manageable renewable generation (wind and solar) in the electricity system. These two technologies played a leading role in previous REER auctions.

Importantly, solar thermal power plant projects bidding in the auction will be required to have six hours of storage.

Biomass, biogas and bioliquid plants need to meet the efficiency requirements set out in Royal Decree 376/2022. Fuels used must comply with the sustainability and greenhouse gas emission reduction criteria established in this regulation.

MARKET EXPOSURE

In renewable auctions, developers bid for the price they are willing to charge for the energy generated in their plants with market exposure. This means that:

• Solar thermoelectric, biomass and biogas facilities will receive the REER for 20 years and will have a market exposure of 15%, since they are manageable.

• Photovoltaic and other renewables will receive the REER for 12 years and will have a lower market exposure of 5%. If it is manageable, it would receive up to 15% (only in the case of photovoltaic).

COMPLIANCE WITH THE RENEWABLE SCHEDULE

The 25 October date is aligned with the 2020-2026 schedule established by Order TED/1161/2020 for REER allocation to a minimum of 200 MW of solar thermal energy, 140 MW of biomass, 140 MW for distributed solar PV and 20 MW for other technologies (biogas, bioliquids, hydro or tidal). 

If the reserves earmarked for each of these groups are not fully allocated, the surplus will be placed into a neutral quota to allow the technologies to compete on an equal basis. This mechanism will not apply to the quota reserved for photovoltaics.

TERMS OF EXECUTION

The deadline for the construction of renewable installations varies according to each technology. Therefore:

• Solar photovoltaic installations awarded the contract will have two years for the construction phase.

• The more complex biomass and solar thermal power plants will have four and a half years for the construction phase.

• The remaining technologies will have four years.

EVERYTHING YOU NEED TO KNOW ABOUT THE FOURTH AUCTION

CAPACITY

This auction is for a larger capacity, with a total of 3,300 MW in wind and photovoltaic energy up for grabs. This capacity will be distributed as follows:

• 1,800 MW for photovoltaic.

• 1,500 MW for wind.

Expansion and hybridisation of existing installations is accepted. Additionally, if any of the quotas remain unfulfilled, the remainder may be transferred for allocation to installations that use a different type of technology.

AUCTION CALENDAR

MARKET EXPOSURE

Plant developers bid on the price they will charge for the energy generated at their plants with some exposure to the market price. It will be regulated as follows:

• Plants with management capacity will have a market exposure of 25 %.

• The rest will be committed to 5%.

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At Vector Renovables we have a team of experts with experience in consulting on renewable projects. Please don't hesitate to contact us for any information you may need!