Spanish renewables players flock to new auction system
Spain’s new support mechanism for renewables enticed investors as more than 3 gigawatts (GW) of solar PV and onshore wind capacity was awarded in the nation’s latest auction – significantly more than initially planned. The country was aiming to allocate 2 GW worth of capacity for solar PV and onshore wind, and 1 GW for other types of technology. Storage was a likely candidate but failed to attract bids. Nevertheless, as major projects have now been lined up and bidding prices have come down, the auction – the first in Spain since 2017 – was a successful one. However, will the new contracts for difference (CfD) auction mechanism adopted by the government be enough for Spain to meet its giant 89 GW installed capacity target by 2030?
The latest auction – held in January – was conducted under a new CfD mechanism, which allows bidders to offer power supply at a set market price. The mechanism delivers the lowest prices for renewables while minimizing the financing costs as it provides 12-year power purchase agreements (PPAs) for project winners.
Solar PV won the largest share of the awarded capacity with bids submitted for 2.03 GW. The average bid price was $29.59 per megawatt-hour (MWh), while the lowest bid in the auction was $18.03/MWh. Companies also submitted bids for 1 GW of onshore wind projects, which were awarded with an average bid price of $30.61/MWh. During the auction, the lowest-ever bid in Europe for onshore wind was submitted, at $24.21/MWh.