Second opportunity for renewables in Spain: new 3000 MW auction announced before this summer

The Spanish President Mariano Rajoy has just announced that a new 3,000 MW renewable energy auction will take place before the summer. The draft of the Royal Decree has been already submitted to the CNMC for its review.  On May 17th, the government already awarded another 3,000 MW of green power, of which 2,979 MW went to wind, 1 MW to photovoltaic and 20MW to other technologies.

The government has justified the launch of this new auction given the great interest attracted by the latest auction. The applications submitted exceeded by more than three times the power awarded and the winners offered the maximum discount allowed. This means that the awarded projects will be carried out without the need for additional premiums to the income they obtain from the market.

According to the announcement, the auction will be technologically neutral, as the one held this month, and it is expected that the selection criteria and pricing rules will also remain mostly unchanged.

Given the complexity of the auction mechanisms and the particularities of the Spanish remuneration regulation, great knowledge of the Spanish market is required when preparing the financial model and calculating the percentage of discount to be offered. The legislation defines the retributive parameters for reference installations of each renewable energy technology (Wind, PV and others). Based on these values, the bidders have to offer a discount over the retribution to the initial investment of their applicable reference installation that will translate to a certain return on a concrete project.

Vector Cuatro advised some of the awarded bidders in the auction held in May by providing different financial advisory services that included the review or preparation of the financial model, the assessment on the auction rules and revenues scheme and the support in the preparation and submission of the bid offers. Vector Cuatro also provided technical and legal advisory services including feasibility study and review of the administrative and land property documentation.

Besides the power awarded in the auction, the Spanish market is increasingly attracting the interest for unsubsidized development. After the slowdown in recent years, the Spanish renewable energy seems to be finally awakening from its lethargy.

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