In early 2016, the Spanish government held an energy auction for 500 MW of wind power and 200 MW of biomass which was oversubscribed by more than five times and drew criticism for lacking a prequalification requirement to compete. Back in autumn last year, the Spanish government announced then plans to hold a new renewable energy project auction, eagerly awaited from the national industry and international players, with high expectations that the auction design would be simplified and/or consider some characteristics of the Spanish market reality (e.g. plant size).
On December 29, 2016, the Ministry of Energy, Tourism and Digital Agenda has finally sent the regulatory proposal for the tender, comprising a royal decree and the corresponding ministerial order, to Spain’s energy watchdog, the National Authority for Markets and Competition (CNMC), where it is currently under review and until January 20, 2017 open to public consultation. The regulation’s main goal is to define the policy through which is projected to introduce a new auction system for renewable energy projects.
The intended 3 GW auction is mainly motivated by the requirement to guarantee Spain meeting its binding European Union target for 2020. The 2020 target demands 20 per cent of the gross final energy consumption to come from renewable sources, and up to now, Spain is still on track to hit its target by 2020. Citing figures from Eurostat, the country beat expectations earlier in 2014 when it achieved a green mix of 17.3 per cent, compared to the 12.1 per cent originally forecasted. Thus, the announcement of the new auction may be considered to be a measure of the Spanish government to demonstrate its intention and efforts to meet also its 2020 targets. However, the message has likewise raised hope among industry players as it could reactivate the national market that suffered a severe slow-down after the retroactive measure taken in 2013.
Although the royal decree and ministerial order in their current draft version do not disclose yet further official details neither all details about bidding rules, according to recent industry sources it can be expected that the auction will be held in two rounds, with the aim of allocating 1,500 MW of renewable energy projects in each. Same sources state that it may be expected that the first round is announced during the first quarter 2017 and winners should be named before March 31, 2017. The second round would be subsequently hold in the course of the second quarter 2017. Nevertheless, industry rumours fear that the 3 GW auction could end in a single bidding round in case enough adequate projects were presented already during the first round and the government would correspondingly amplify the allocation capacity to the maximum.
In any case, this tough timeline, which somehow requires projects in an already advanced development stage in order to fulfil milestones, is mainly conditioned to the fact that winning projects would be required to be operational by December 31, 2019, in order to contribute to the fulfilment of the EU 2020 target.
Despite the criticism caused by last year’s auction, the new announcement of the upcoming tender does not differ a lot from the previous one, even though the government has opened this auction up to all technologies. Important to highlight in this context that the new regulation will be introduced and function under the umbrella of royal decree RD 413/2014, the policy which currently regulates the Spanish renewables’ market and establishes that the special remuneration to new renewable projects will be allocated through future public tenders.
That said, a couple of relevant features that may be considered for this auction round, expected to be hold during the next couple of weeks, can be summarized as follows:
- Bidders offer a discount on the standard value of the initial investment of the reference standard plant (defined by the government). The bidding will be performed as sealed-bid, price-only auction, following a uniform pricing rule format, i.e. all the winners receive the discount of the last bid being accepted, which will set such discount.
- Allocated capacity does not have to be associated from the very beginning to any specific project, but oblige bidding parties to register any projects, according to the awarded capacity and technology, within six months, in accordance to the standard regulatory procedure. Subsequently, they have 12 months in order to finalize the official approval process.
- Also it is relevant to know that bidders are required to present a financial guarantee, established at 60 Euro per kW. This guarantee would be enforced in case the 12-months-deadline, for managing all operational and administrative approvals, would not be met.
Summing up, in contrast to recent auctions observed in several geographies worldwide, The Spanish auction system distinguishes through the difficulty of the bid preparation process. Nevertheless, important to highlight, aforementioned details do not have to be translated in ruling policy, but are only based on current draft versions of the suggested regulation and corresponding industry discussions and should be considered solely as an approximate guideline for further analysis of the bidding process.
Last but not least, relevant to note that the technologically neutral 3 GW auction has been designed for projects on the Spanish mainland only. However, as per a recent statement of the Ministry of Energy, Tourism and Digital Agenda, there will be additionally hold a renewable energy auction for the Spanish islands in the first quarter of 2017. Whereas such an announcement for the Canary Island seems already clear, the implementation of a second one for the Balearic Islands remains somewhat controversial.
Vector Cuatro entered the renewable energy market about ten years ago, supporting industry players through its different business lines along the entire value chain of green power plants. The team is composed of highly qualified professionals with various engineering and financial backgrounds and a proven experience in the renewable energy industry, who always aim to respond best the specific needs of each of their clients, in accordance to local characteristics. In the Spanish renewables market, Vector Cuatro is one of the most recognized and experienced independent service firms, with a strong network in the industry. Today the company has over 250 MWp of solar PV and wind power plants under management. In addition, Vector Cuatro counts on a considerable track record equivalent to around 2 GW as Technical and Financial advisor providing a great variety of services that include owner’s engineering services, on-site audits, technical due diligences, support in financing or refinancing processes or elaboration of financial models, among others.
Concerning the new evolvements within the renewable energy market in Spain, Vector Cuatro’s professional team is available to render any kind of support to interested market players, in terms of legal, technical and financial assessment, for any new solar PV or wind power plants during the bidding process as well as their subsequent design and development, construction, selling, financing and operation phases. That may include support in the project sourcing, the elaboration of financial models for the auction, the preparation of the basic and detailed engineering or the support during the financing and subsequent construction and operational phases.Read More
The Spanish group has advised Primrose Solar from the early stages of their project to their recent divestment, providing technical support during the development and construction of most of its plants and the sale of its entire portfolio.
Primrose Solar, one of the leading solar PV developers in the UK, recently announced the sale of its five remaining solar assets that total 80 MW. This is the third successful sale process carried out by Primrose in 2016. The company closes the cycle that began in 2013 with the investment in four projects with fixed mounting structure. Primrose Solar’s portfolio reached 253 MW with 15 solar farms in England and Wales, including some of the largest plants in the country and built under some of the best quality standards that can be found in the UK.
Vector Cuatro has actively participated during all phases of most of these projects. The company has supported the Primrose Solar team from the initial analysis to the sale of the portfolio, providing also the technical support during construction and commissioning.
Giles Clark, CEO Primrose Solar, said that “Primrose is delighted to have enjoyed a very close and constructive working relationship with Vector Cuatro. Vector Cuatro’s support has been invaluable in helping us to complete a demanding set of transactions in 2016 and we have very much appreciated the depth of their technical expertise and the quality of their work”.
Vector Cuatro entered the UK´s renewable energy market for the first time in 2011 as Technical advisor for solar PV power projects. Since then, the company has carried out several technical advisory projects positioning itself as a key reference in this market. In 2015, with the aim of providing an improved service to projects in the UK as well as continuing to strengthen its international presence, Vector Cuatro opened a new office in London.
At the moment, Vector Cuatro has taken part in more than 600 projects in 22 countries worldwide and is internationally ranked as one of the most important companies in the renewable energy industry. It has over 1.5 GW of power under management, 4 GW in financial advice and counts with a track record of 16 GW throughout the entire value chain of the projects.Read More
Argentina restarts its renewable energy services industry with a policy review and ambitious goals towards 2025
Essential economic reform plans of Argentina’s new government under president-elect Mauricio Macri, with a major transformation of the electricity sector, are currently favouring a renewable energy services boom in Argentina. A total of 9 GW of new green capacity is expected to be introduced to the electricity mix by 2025.
Since the new Administration has come to power in late 2015, the Renewable Energy Market in Argentina got strongly pushed and has already attracted a lot of interest among international project developers and investors. Although the previous government had already set in place renewable energy targets and a legal framework with the aim to promote renewable energy development in Argentina, the current share of renewable energy sources in the country’s energy mix amounts only to 1.8%.
In October 2015 a new bill No. 27.191 was introduced and sets today together with Decree 531, released in March 2016, the support scheme which is causing tremendous interest in the market. Although the market still has to struggle with a weak peso, high inflation levels and low growth rates as heritage from the past, against the new political background and Argentina’s ambitious target of generating 8% of the country electricity from renewable energy sources by 2017 and 20% by 2025, a strong development of the green power industry during the coming months and years can be expected.
Part of the Macri’s administration strategy in order to support this transition is the renewable energy auction programme “RenovAr” which will be carried out in several phases. Argentina’s wholesale power market administrator CAMMESA released on May 18, 2016, the draft tender documents for the first phase (RenovAr Ronda 1), which is currently undergoing a period of consultation and aims to procure a total of 1 GW of which wind energy, as the dominating technology, is accounting for 600 MW of the capacity tendered, solar PV for 300 MW and smaller shares may be allocated to biomass (65 MW), small hydro (20 MW) and biogas (15 MW).
While official tender documents are expected to be published by July 1, 2016, the winners of the first tender will be announced in September this year, with PPAs set to be signed by October 28, 2016. According to draft tender documents, project developers will have to present a Yield Assessment Report (Reporte de Producción de Energía, RPE) to be considered eligible, elaborated and certified by an independent consultant who must declare to have minimum 1,000 MW experience in the conduction of similar studies in the local or international market. This Yield Assessment Report should not date back more than three months from the date of presentation of the bidding proposal.
Vector Cuatro entered the Americas’ renewable energy markets first in 2011 as independent consultant in the US and several countries in Latin America.
Given the strong growth of renewables in those markets in the following years, the Firm finally opened in 2013 its office in Mexico as a regional hub from which it manages all its operations in the continent, always supported by the Madrid headquarters. However, given the strong activity of the group and arising interest of the industry in the Southern cone, Vector Cuatro is currently opening a new office in Santiago de Chile to cover South America at closer range.
The services rendered by the Firm both for solar PV as well as for onshore wind projects have been adapted to the great variety of clients and always aiming to best respond specific needs of each of them, in accordance to local characteristics.Read More
The Spanish consultancy, one of the leaders in professional services for renewable energy projects worldwide, has provided technical advisory services in a 190 MW solar project in the southeast of the country.
The project is composed of five solar PV plants located in Minas Gerais that are expected to begin construction during 2016. Thanks to its proven track-record, Vector Cuatro has been selected to carry out the solar resource assessment in this first phase as well as the yield assessment of the expected lifespan of the PV plants.
The company continues growing by assuming new projects and entering different markets. Specifically in Latin America, Vector Cuatro totals experience providing its services as Technical Advisor in more than 1,300 MW, in Mexico, Guatemala, the Dominican Republic, Ecuador, Peru, Honduras, Chile, El Salvador and Panama.
The Brazilian electricity market was redesigned by a legal reform in 2004. The new scheme which was introduced by the reform creates a regulated market where distribution companies contract their energy demand through energy auctions. At the moment, in Brazil are only 22.9 MW of solar PV capacity installed, although another 1,851 MW were already awarded by auction and are to be connected in the coming years. Additionally, for 2016 there have already been announced two further auction processes, the first one to be hold on July 29, with plans to contract each one approximately 1 GW of capacity.
Solar MWRead More
The Spanish multinational continues to strengthen its activities in the wind power industry and begins now a new stage of commitment becoming a member of the Spanish Wind Power Association AEE, the voice of the wind sector in Spain.
Thus, Vector Cuatro joins the project of more than 200 companies associated with the AEE to promote wind energy in Spain and the rest of the world by defending their interests as well as supporting research, communication and education.
With this new affiliation, Vector Cuatro aims to strengthen its position regarding new business opportunities, to get in touch with the main players in the wind energy sector and to learn about new technological developments and trends emerging in renewables.
To date, Vector Cuatro has provided engineering services for wind projects totaling 1,300 MW in technical due diligences, project development and resource studies among others.
At the moment, Vector Cuatro has carried out more than 600 projects in 22 countries worldwide and is internationally ranked as one of the most important companies in the renewable energy industry. It has over 1 GW of power under management, 4 GW in financial advice and counts with a track record of 16 GW throughout the entire value chain of the projects. In September 2014, the company was incorporated into the Italian Falck Renewables Group (FKR.MI), a leading player in the European renewable energy industry and listed at the Milan Stock Exchange.
The Firm, global leader in asset management, technical advisory and investment services in the green power industry, is performing technical advisory services for a solar PV plant developed by Nippon Solar Services in the Oita prefecture, Japan.
The service involves rendering technical advice in a 33 MW solar PV project. The project, successfully reached financial close the 8th of December 2015, is expected to begin construction in the first quarter of 2016, and start operations in 2018. The plant will be located in the Japanese prefecture of Oita where Vector Cuatro has already given support to other projects which total more than 250 MW.
Vector Cuatro has already carried out the Technical Due Diligence of the project and will start monitoring the construction and performing the verification of milestones once construction begins.
The firm considers Japan as one of its main markets. Since its opening in 2012, Vector Cuatro Japan has strengthened its presence considerably, offering technical services, consulting (selection and negotiation of EPC contractors, construction projects, advice for project financing, etc.) and asset management services. In 2015 the company moved to a larger office in Tokyo country and continued to increase its professional team.
With this 33 MW project, the Firm accumulates an expertise in technical services of over 4,000 MW in more than a hundred of projects in Japan.
Legal: Anderson Mori & Tomotsune, Linklaters and Kanagawa International Law Office
Technical: Vector Cuatro
Financial model and tax: PWC & KPMG
Insurance: AONRead More
Vector Cuatro positions itself as reference technical advisor for the next renewable energies auction in Mexico
As deadlines are approaching, market players are now moving faster in order to get everything ready for the first and most awaited renewable auction in Mexico. The expectations surrounding the auction are high: by 2018, 5% of the energy produced by the CFE (Comisión Federal de Electricidad), Mexico’s main energy distributor, should come from clean resources, thus, it is expected that CFE buys up to 2,500MW through this auction.
The final version of the tender documents (Bases de Licitación para la Primera Subasta de Largo Plazo del 2015 (SLP-/1/2015) was finally published on December 28, 2015, complying, as before, with the established deadlines. Now, bidders have to prequalify their offers before February 11. According to the guideline for the bidding process (Manual de Subastas a Largo Plazo, published on November 10) and the annex 5.3.4 of the tender documents the following information provided by bidders for the prequalification of their selling offers should be validated by an independent expert:
- The capacity of the plant, in MW.
- The expected load factor in the 100 critical hours of a typical year or during every hour of the typical year, taking into account the expected unavailability of the plant due to maintenance and forced disconnections.
- The expected load factor during a typical year.
- The percentage of energy that is intended to be certified as “Energía limpia” (clean energy)
Vector Cuatro, as a reputed technical and financial advisor with a large track-record worldwide and in the Mexican market, is supporting its clients to fulfill the above-listed requirements as well as rendering financial modelling services and supporting in the preparation of relevant documents required under the tendering ruling and by CENACE such as annex 4.
The awarded bidders are expected to be unveiled by the end of March. In particular, the deadline for the reception of proposals is March 28, 2016 (9am-3pm), being evaluated in the following days (March 28 to 30) and is scheduled to be finished with the acceptance and assignment of the bid contracts on March 31, 2016.
Vector Cuatro entered the Americas’ renewable energy markets first in 2011 as Technical Advisor for solar PV plants in the US and several countries in Latin America.
Given the strong growth of renewables in those markets in the following years, the Firm finally opened in 2013 its office in Mexico as a regional hub from which it manages all its operations in the continent, always supported by the Madrid headquarters.
The range of services which renders the Mexican team have been adapted to the great variety of clients and always aiming to best respond specific needs of each of them, in accordance to local characteristics. Concerning the initiated energy auction the professional team is available to render any kind of support to interested bidding parties, not only throughout the entire bidding process in terms of legal, technical and financial assessment, but also during the subsequent construction, selling, financing and operation phases of the power plants.Read More
In the context of the implementation of its national Energy Transition Act in July 2015, France sets itselfnew ambitious energy targets which prospect a promising future for the renewable energy market. In a nutshell, French authorities aim through the new legal framework to reduce in terms of electricity production the proportion of nuclear from 75% to 50% by 2025, to source 40% of electricity from renewables in 2030, and overhaul the countries subsidy regime. The Energy Transition Act seeks to better integrate renewable energy projects into the internal electricity market in a gradual way.
In this respect, for the gradual replacement of the existing Feed-in-Tariffs (FiTs), a new support mechanism, the contract for difference (CfD), is introduced, coming into force in January 2016.
In consequence of the implementation of the new support mechanism – only applicable for renewable energy projects located on the metropolitan territory -, power producers shall sell their produced electricity on the wholesale market (marché de gros), and can choose for one of the three available options:
- The European Power Exchange market (EPEX spot);
- A commercial power purchase agreement (PPA) concluded with an off-taker, a local entity in charge of the public electricity network or any electricity suppliers, with negotiated price and duration;
- A commercial PPA concluded with an aggregator who purchases the electricity at a certain price and is responsible for the sale of the electricity on the spot markets.
The producers will receive a “reference market price” based on the price earned on the wholesale market. When the reference market price falls below the target price, the producer receives a top-up payment or premium (complément de rémuneration), and pays the difference back to the government when the inverse happens.
In this regard, the introduction of the aggregator as a new type of actor in the electricity market in France is expected to become relevant with regard to a proper demand response, which is a crucial element of any sustainable energy market. The main objective of the aggregator, as buying agent, is the optimization in terms of energy capacity and financial valorisation. The aggregator assumes the functions of representing its customers by purchasing the produced electricity at a certain price, as well as to forecast, supervise and control the production and the consumption of its portfolio to valorise the electricity of their portfolio in the wholesale market.
Although uncertainty still surrounds the forthcoming transition, total onshore wind and solar power targets have been set to reach an overall 24 GW by 2018 and an overall 36-43 GW by 2023. The aim to allocate 4,350 MW of PV power through solar auctions that will be held over the next three years, as well the onshore targets which offer for 2023 an annual build rate of 1.5-3.25 GW, clearly benefit the renewable energy markets in France.
The development of competitive bidding processes seeks to increase cost effectiveness and limit distortions of competition. The Energy Transition Act provides the possibility for the French government to organise calls for tender under which the awarded projects will benefit from the available support mechanisms (FiT versus CfD).
Vector Cuatro started its business activities in France already back in 2012. Today the Firm counts on a considerable track record within the French market.
The local team is composed of highly qualified native professionals with various engineering backgrounds and a proven experience in the renewable energy industry, who always aim to best respond specific needs of each of their clients, in accordance to local characteristics. Concerning the new evolvements within the renewable energy market in France, the professional team is available to render any kind of support to interested market players, in terms of legal, technical and financial assessment, for already operating green power plants in terms of production forecasts or maintenance information, but also for any new solar PV or wind power plants during the bidding processes as well as their subsequent construction, selling, financing and operation phases.
In line with the prosperous evolvement of the renewable energy market during recent years and the boom that experienced above all the solar PV industry (with, as of December 2015, 750 MW in operation, an additional 2,270 MW under construction as well as further 14.4 GW in different development stages), Chile continues experiencing promising expansions in its renewable energy industry.
After the announcement of the Ministry of Energy in October 2015 that in 2050 no less than 70 per cent of the Chilean electric demand is going to be met with renewable energy sources, which implies an increase of 58 per cent with respect to current renewable generating facilities, the industry perceives further positive news:
- Construction of the very much awaited transmission line which will finally connect the two most relevant electrical subsystems, namely the Sistema Interconectado Central (SIC) grid with the Sistema Interconectado del Norte Grande (SING) grid, has already been started, and is expected to boost renewable energy in the country.
- Chile’s Ministry of National Resources is holding a public tender for nearly 3,000 hectares of land in the region of Arica and Parinacota to be used for renewable energy projects.
- CODELCO announced early last week (January 4, 2016) the opening of a bidding process amongst companies which are interested in rendering construction, operation and maintenance regarding the development of two solar PV plants with self-consumption purposes on the mine’s premises.
- The Ministry of Energy approved and published (January 6, 2016) an initial resolution for the next official energy supply tender which invites interested parties to express their interest to participate in a previous analysis for the tender process.
Vector Cuatro entered the Americas’ renewable energy markets first in 2011 as Technical Advisor for solar PV plants in the US and several countries in Latin America.
Given the strong growth of renewables in those markets in the following years, the Firm finally opened in 2013 its office in Mexico as a regional hub from which it manages all its operations in the continent, always supported by the Madrid headquarters. However, given the strong activity of the group in the Southern cone, Vector Cuatro is currently preparing the opening of a new office in Santiago de Chile to cover those geographies at closer range.
The services rendered by the Firm have been adapted to the great variety of clients and always aiming to best respond specific needs of each of them, in accordance to local characteristics. Recently, Vector Cuatro has been very active in helping companies in their participation in energy auctions (e. g. in Mexico).
Concerning business opportunities which may arise of the announced energy tender processes in Chile, the professional team is available to render any kind of support to interested bidding parties, not only throughout the entire bidding process in terms of legal, technical and financial assessment, but also during the subsequent construction, selling, financing and operation phases of the power plants. These services may include the assessment in the preparation of tender documents; the financial modelling and structuring; and support in the negotiation of contracts, among others.
Furthermore, the transactions department is now working on the origination of several opportunities (selling/acquisition) in the country amounting around 900 MW and would be glad to seek additional collaborations or information of interest in the country.