New renewable energy auction called with 3100 MW reserved for specific technologies

AleaSoft, September 15, 2021. The resolution for the new renewable energy auction in Spain is already published. The auction will take place on October 19 with a bid of 3300 MW, 10% more than the first auction of 2021, out of which 3100 MW will be reserved for specific technologies and facilities with specific characteristics, and only 200 MW will be technologically neutral.

AleaSoft - Solar Panels

On September 9, the resolution of the Ministry for the Ecological Transition and Demographic Challenge that calls for the second renewable energy auction of 2021 was published in the BOE. The auction will be held on October 19 and the auctioned capacity will be 3300 MW on this occasion. The first auction of 2021, the first since the last in 2017, finally awarded 3034 MW of renewable energy capacity.

The auctions and the electricity market prices

According to the published resolution, among the objectives of holding the auction is the reduction of the electricity prices. As already stated after the results of the first auction, the impact of the auctions on the markets prices will be difficult to perceive, among other reasons, because the renewable energy facilities subject to the REER (Renewable Energy Economic Regime) will coexist with the full merchant plants that sell all their energy in the market and with the plants that signed a PPA.

Renewable energy auctions have their reason for being, but they must be designed carefully so as not to distort the market and be a bad sign for investors. Photovoltaic energy is mature to compete in the market without aid and the objectives of the NECP can be achieved without the auctions, although they make sense in specific cases such as the reactivation of regions that lost competitiveness due to the closure of coal‑fired power plants, or for regions with less solar resource, or even to allow the development of new less mature technologies.

Auction by technologies

On this occasion, practically all of the 3300 MW will be in four minimum reserves for specific technologies and only 200 MW will be available for any renewable energy technology. The largest quota, of 1500 MW, will be allocated to the onshore wind energy, while for the photovoltaic energy, the reserve is slightly less than half, of 700 MW.

AleaSoft - Renewable energies auctionSource: Prepared by AleaSoft with information from the Ministry for the Ecological Transition and Demographic Challenge.

To the 700 MW of photovoltaic energy, it is necessary to add 300 MW more of this technology, but that will be destined to facilities with certain characteristics. This reserve will be for distributed photovoltaic energy and on a local basis. They are facilities with a maximum of 5 MW and whose ownership and financing must be local and participatory.

Finally, the remaining 600 MW will be for “accelerated availability” wind and photovoltaic energy. This item is intended for facilities that may be available before 2022-09-30 and whose twelve‑year term to deliver the energy under the REER must begin before 2023-01-31.

In addition, as in the first auction of this year, plants with storage will be admitted only if it is used to store the generation of the facility itself and not energy from the grid.

AleaSoft’s analysis on the prospects for energy markets in Europe

On October 7, the monthly webinars organised by AleaSoft will resume. On this occasion, the speakers from AleaSoft will be accompanied by speakers from the consulting firm Deloitte. This webinar will take place almost a year after the one held in October 2020 with the same speakers. At this year’s meeting there will be an update on the topics discussed on that occasion, relating to the evolution of the European energy markets in the last year, the renewable energy projects financing and the importance of the forecasting in audits and portfolio valuation.

Source: AleaSoft Energy Forecasting.
Long term forecasting

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