The renewable auction for 3300 MW is almost empty due to low prices

The fourth renewable energy auction under the new payment regime was almost abandoned, despite 3,300 “green” megawatts (MW) at stake. The reason for this is the low price that was finally offered for the development capacity, sector sources told Europa Press.

The low reserve price finally set by the Ministry of Ecological Transition and Demographic Challenges put off the majority of bidders. Although there was no interest in the previous auctions, there was competition, albeit at higher prices than set.

According to sources in the sector, only 50 megawatts have been awarded in the tender, with one of the winning companies being Elawan, with around 30 megawatts. However, the outcome of the auction must be confirmed by the National Market and Competition Commission (CNMC).

The auction held last October ended with a weighted average price of €31.65/MWh for photovoltaic technologies and €30.18/MWh for wind power. However, these prices have increased substantially in the current situation to make the development of the projects attractive.

This new renewable energy auction put a total of 3,300 megawatts of renewables at stake, structured into two capacity quotas, one of 1,800 megawatts for photovoltaics and another of 1,500 megawatts for wind power.

The government has already started auctioning three renewable energy economic regime (REER) allocations. The two, held in January and October 2021, also focused on photovoltaic and wind technologies, awarding a total of 2,902 MW of photovoltaic and 3,256 MW of wind, at prices well below registered wholesale electricity market prices. success.

However, the third auction held a few weeks ago was already a warning for today’s auction by awarding only 177MW of the 520MW that was “punctured”, rendering all that was up for sale void. Solar thermal is available.

The cabinet led by Teresa Ribera estimated that this auction, if fully covered by the 3,300 MW capacity, would represent gas savings of 11,000 gigawatt hours per year, representing 2.9% of Spain’s total gas consumption in 2021. and reducing greenhouse gas emissions by approximately 2.7 million tons of carbon dioxide (CO2) equivalent. In addition, the forecast assumed that the investment required to implement the awarded capacity would be around 2,900 million.

To get the REER in the auctions, developers buy the price they are willing to pay for the energy their plants produce – 12 years in the case of wind and solar, with some exposure to the market price.

As in other auctions, the winning companies were also required to submit a strategic plan with assessments of the impact on local employment and the industrial value chain. In addition, access to future REER auctions will be denied to winning facilities to prevent denial of the treatment granted in that auction in order to attend a subsequent auction.

Source: El Diario

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