At least 1GW of PV capacity to be included in Spain’s renewables auction next month

Image: Sonnedix.

The first of Spain’s new clean energy auctions is set to take place next month, with the country’s government allocating a total of 3GW of renewables capacity. While at least 1GW will be for solar PV and another 1GW for onshore wind, the remaining capacity will be auctioned without technological restrictions.

Winning PV projects from the auction on 26 January will receive a 12-year power purchase agreement.

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Parties interested in submitting bids will be able to send documentation from tomorrow (15 December), with participants asked to present a strategic plan for their proposed projects, including job creation benefits and a carbon footprint analysis.

The announcement marks the beginning of Spain’s new auction mechanism, which foresees a total of around 19.4GW of renewables to be assigned through auctions between now and 2025, with at least 10GW of that capacity to be solar PV. The pay-as-bid system will allow hybridisation between technologies and be compatible with energy storage.

Minimum accumulated PV capacity included in Spain’s new auctions (MW)

2020 2021 2022 2023 2024 2025
1,000 2,800 4,600 6,400 8,200 10,000

Announced last month, the new mechanism is described as “essential” to meet the decarbonisation commitments included in Spain’s Integrated National Energy and Climate Plan (PNIEC), which calls for the country to install 60GW of renewables capacity by 2030.

Spain’s environment ministry said the new auctioning system will offer a stable framework that attracts investment and encourages economic activity throughout the country’s clean energy value chain, while at the same time allowing consumers to directly benefit from the reduction in the generation costs of renewables.

While the new auctions been welcomed by Spain's solar association, UNEF, which said they will provide more certainty for investors, questions have been raised about their need, given that PV projects are currently being financed and developed on a merchant basis in the country.

Speaking at the recent Large Scale Solar Europe Virtual Summit event, José Antonio Urquizu, founding partner of Spanish investment firm Everwood Capital, said he sees the auction as an “artificial interference on market pricing”. For Spain to reach its renewable energy targets, Urquizu called for additional resources to be devoted to permitting and speeding up administrative procedures.

After a record amount of solar PV capacity was installed in Spain in 2019 – consisting of 4,201MW of ground-mounted arrays and 459MW of distributed projects – power generation from the technology in the first nine months of 2020 was up 67.5% year-on-year. According to grid operator Red Eléctrica de España, renewables generation between January and September was 16.3% higher than the same period of 2019.

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