Spain awards 2.2GW of onshore wind in latest auction

Spain concluded its fourth renewables power auction yesterday, allocating 3,123MW of wind and solar PV power combined. As in the previous tender, smaller newcomers dominated, with big utility players shying away.

A quota of more than two thirds was reserved for wind, accounting for 2,258 MW of the total allocation, with solar PV taking the remaining 865MW.

Overall, 95% of the 3.3GW on offer was allocated.

For the second time running, the lion’s share in wind went to relative newcomer Capital Energy, which bagged 1,548MW of the wind power allocation and 8MW of solar PV.

The average price achieved is just under €34/MWh for wind and nearly €29/MWh for PV solar — more than €4 higher than in the previous auction, which was held in January this year and marked record low prices for wind power in Europe.

This was the second renewables auction under the socialist coalition government, which has set an ambitious clean energy agenda, including a 50.3GW target for installed wind capacity to 2030 — up from roughly 28GW today.

In the January auction, Capital Energy was awarded 660MW of the 998MW wind power allocation.

New auction system

The government plans to schedule a further four auctions, one a year, to 2025, all based on power purchase agreements (PPA) using contracts for difference (CfD) —applied for the first time in Spanish renewables in the January auction.

Under CfDs, the government underwrites power purchase agreements at a set or “strike” price; in this case, for a ten-year period. If the wholesale electricity price falls below that price, the state covers the difference. If it goes above, the generator pays back the difference.

Full and final auction details had not yet been officially published by the time of writing, although there has been confirmation of the other main winners. 

Forestalia, an energy splinter company from agro-food corporation Grupo Jorge, was allocated 777MW — 562MW wind and 215MW solar PV capacity.

The company had previously bagged the lion’s share in Spain’s first two renewable power auctions, 2016-2017.

The only major corporations to be allocated power yesterday were oil and gas giants Naturgy and Repsol, landing 138MW of wind and 221MW of PV, respectively.

Power giant Iberdrola and fellow Spanish utility Endesa, both main wind players, did not bid.

The Spanish press has widely relayed the utilities’ narrative that they abstained in protest at the government’s September decree curtailing the extra profits for renewables generation caused by the spike in wholesale electricity prices due to soaring gas prices.

However, neither utility had been a significant bidder in the three previous auctions either.

Indeed, “the auctions don’t need big players and the big players don’t need auctions,” Alberto Ceña, CEO of consultancy Bepte, told Windpower Monthly.

The big players have long since had sites and permits in place and also have the economic clout to secure PPAs without needing the auctions, argues Ceña. Conversely, smaller and newer players need them to guarantee minimum energy prices and to ease project processing.

Meanwhile, the deadline for connecting the power awarded in the latest auction is 30 June 2024, apart from a 600MW tranche which must be connected by 30 September 2022.