Solar has won the bulk of capacity on offer in Spain’s latest renewable energy auction. But onshore wind bids have surprised analysts by coming to within a hair’s breadth of the average price for PV.
The Spanish tender this week — the country's first since 2017 — saw solar carrying off 2,036 megawatts of capacity at an average weighted price of 24.47 euros ($29.63) per megawatt-hour and onshore wind taking 998 MW at €25.31 ($30.66) per megawatt-hour, a difference of just $1.03.
Solar had been predicted to be the big winner in the auction, which featured a gigawatt of capacity each for PV and onshore wind plus a further gigawatt with no technology restrictions. Although any technology could potentially bid into the third allocation, PV ultimately swept the board.
“I believe everyone expected PV to win the full allotment of the technology-neutral pool due to its superior economics in this market,” commented Brian Gaylord, Wood Mackenzie principal analyst for Latin America and Southern Europe, in an email.
“That said, I don't think anyone expected the pricing to be this close. Overall, I think the pricing for PV was a bit higher than expected, while wind was somewhat lower than expected. Above all, the proximity of the pricing for the two technologies is probably the big takeaway for me.”
Overall, he described the pricing as “responsibly aggressive.”
Capital Energy wins big
The lowest bid for solar, coming in at €14.89 ($18.04) per MWh, was for a 30 MW solar plant from Ignis Desarrollo, part of a Madrid-based vertically integrated energy firm that took 125 MW of capacity overall. This price is said to be one-third of the lowest solar bid in Spain’s last auction.
The lowest wind bids, meanwhile, came from Spanish project developer Enerfín, which offered €20 per MWh for two 10 MW projects of the 40 MW it was awarded in the auction.
At the top end, PV and wind practically tied on price, with the highest bids coming in at €28.90 ($35.01) and €28.89 ($35), respectively.
The big winner in the contest was Spanish renewables developer and retailer Capital Energy, which picked up 620 MW worth of wind projects to add to its 30 GW Iberian Peninsula pipeline.
X-Elio and Iberdrola also emerged with significant wins, taking 315 MW and 243 MW of the solar capacity on offer, respectively.
A total of 32 developers were awarded capacity in the auction, which the Spanish Ministry for Ecological Transition and the Demographic Challenge said attracted 84 bidders with a combined 9.7 GW of projects.
“The installation of these 3,034 MW will mobilize investments worth around €2.1 billion [$2.5 billion], employing around 27,000 workers,” said the ministry in a press release.
The average price in the auction was 43 percent lower than current long-term electricity pricing, the Ministry said.
New auction format for 60-gigawatt push
The timing of the auction was fortuitous: As the early results were coming in on Jan. 26, Spain’s Minister for the Ecological Transition and the Demographic Challenge, Teresa Ribera Rodríguez, was facing questions over soaring electricity bills caused by the freezing weather recently seen across the country.
“In the last two years, we have adopted more than 50 measures around strategies, planning, market reform, renewables integration, storage, self-consumption or energy efficiency, all key to the progressive reduction of energy costs,” she said.
This week’s auction was the first in Spain to use a new pay-as-bid model that replaced a flawed scheme employed in tenders during 2016 and 2017. It will be used for annual auctions up until 2025, as the country moves toward a target of 60 GW of additional renewables capacity by 2030.
Spanish renewables associations such as APPA Renovables praised the new auction design over its predecessor but also highlighted perceived shortcomings in the tender process.
“A high level of participation is magnificent news for the sector, but just as with the auctions in 2016 and 2017, the success will be measured in terms of the projects that ultimately get connected to the network,” said José María González Moya, APPA’s managing director, in a press release.
Juan Virgilio Márquez, CEO of the Wind Industry Association (Asociación Empresarial Eólica), echoed this sentiment.
“The efficiency of the recent auction should be measured by the ratio of projects actually executed within the timeframe assigned and by the positive impact they have on the supply chain,” he said in a press statement.