Spain has launched a young for as much as three.18 gigawatts of renewable era in its first public sale below a pay-as-bid mannequin launched earlier this yr. 

The mannequin, just like the contracts-for-difference program used within the U.Ok., goals to appropriate issues with auctions in 2016 and 2017. These earlier auctions inspired costs so low that builders primarily needed to flip to service provider markets or bilateral power-purchase agreements to make a revenue, mentioned Madrid-based Brian Gaylord, principal analyst for Latin America and Southern Europe at Wooden Mackenzie Energy & Renewables.

The 2016 and 2017 auctions adopted years of minimal capability additions brought on by an unfavorable regulatory atmosphere, and so they got here with the specter of worth revisions each three years. That led some bidders to make use of the auctions as a method of securing capability as a way to promote power on the open market. 

“You possibly can’t have these auctions the place there’s nothing being given of worth,” Gaylord mentioned in an interview. The public sale assessment course of “wanted to be carried out.” 

Though entrants to the 2020 public sale, which is because of shut on Jan. 26, can, in concept, submit zero-subsidy bids, there may be little incentive to take action as a result of they are going to be certain to promote all their power at their bidding worth, with small changes associated to wholesale market pricing. 

The brand new guidelines have garnered a combined response from renewable power actors. Maybe cautious of the hostility that the sector has seen from previous Spanish administrations, renewable power associations have been broadly supportive of the public sale scheme, mentioned Gaylord.

The very best a part of the brand new regulatory framework is that it gives 12-year offtake agreements for photo voltaic and wind and underpins plans to acquire 5 GW of renewable energy a yr over the following decade. “The trade has been asking for stability and visibility,” he mentioned.  

Issues over the small print of the public sale framework

Nonetheless, some observers have voiced concern over the small print of the brand new guidelines. One fear raised by Javier Colón Cortegoso, supervisor of company energy reseller Neuro Energía, is that public sale winners will receives a commission for power bought relatively than power produced.

This might result in energy producers making an attempt to distort the market by not promoting till costs are excessive or claiming that power from low cost types of manufacturing comes from costlier vegetation. 

Beneath the present scheme, “costs will come down initially,” Colón Cortegoso mentioned in an e-mail, “however with a greater public sale mannequin, they may come down extra by avoiding actions that might have a tendency to control the market and scale back uncertainty for retailers that serve closing customers.”

It’s unclear whether or not these worries concerning the public sale design are widespread or nicely based. “We’d like auctions as a result of offtakers are shedding their urge for food for Spanish [power-purchase agreements],” mentioned one power insider who requested to not be named. “One other [question] is whether or not the design is perfect.”

Alternatively, Jose María González Moya, managing director of the Spanish renewable power affiliation APPA, mentioned in an interview that whereas the public sale system had been criticized, “We don’t suppose it’s unhealthy. It’s what we’ve been asking for all alongside.” 

Solarpack, a PV developer with 295 megawatts of capability in Spain, additionally welcomes the brand new public sale framework. 

“We expect the publication of this regulation could be very optimistic,” an organization consultant mentioned in an announcement to GTM. “Our view is that this mechanism assures probably the most aggressive value of renewable era and on the similar time gives the long-term visibility of income that [these kinds] of tasks want. It permits renewables to develop with an satisfactory threat profile.”

A potential opening for floating offshore wind

This month’s tender features a 1 GW allowance every for PV and onshore wind, with the rest going to different applied sciences together with concentrated solar energy, hydro and biomass.

The supply of this further gigawatt of capability has led Spain’s wind sector to push for the institution of a floating offshore trade.  

A examine by European innovation physique EIT InnoEnergy and consulting agency Enzen claims that the Iberian Peninsula, whose waters are too deep to accommodate fixed-bottom offshore wind, might set up as much as 22 GW of capability on floating platforms by 2050, creating between 43,669 and 77,825 jobs.

“We’ve to create a mechanism, primarily based on greatest observe, to develop funding in offshore wind in Spain in an orderly method,” mentioned Juan Virgilio Márquez López, CEO of the wind enterprise affiliation AEE, in a webinar. “And for that we’d like auctions. Different international locations have a transparent view of this.”

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