UPDATED: Spain paves way for further 3GW of subsidy-free renewable power

18 May 2017 10:51 Source:ICIS

Almost 3GW of wind power was successful at Spain’s latest auction of renewable electricity capacity. This meant wind farms claimed almost all of the capacity on offer. Just 1MW of solar photovoltaic was successful, with 20MW going to other technologies.

In a “scenario of average reference prices”, the wind farms bid in “at no cost to the consumer”, the energy ministry said. This implies that Spain will look to bring a huge 3GW of renewable power capacity to market free from any form of public subsidy, adding to the 700MW of subsidy-free wind and biomass that was successful in its last auction in January 2016.

This hugely extends Spain and Europe’s push into a subsidy-free era of renewable power.

Winners have committed to bring the new capacity online prior to 2020, when renewable sources should cover 20% of Spain’s electricity demand, according to EU targets.

Additional renewable capacity has dried up over recent years, but renewable supply met 17.3% of demand in 2015, according to the energy ministry.

Wind success story

“The result gives hope after many years of paralysis,” a spokeswoman for the wind producers’ association AEE told ICIS on Thursday. “This is good news for the industry.”

The biggest winner was Spanish new-comer Forestalia, which swept up 1.2GW in a repeat of its surprise success at the 2016 auction when it claimed 300MW out of 500MW wind capacity on offer.

Spanish utility Gas Natural Fenosa said it would invest €700m in the development of the 667MW capacity it had won. This would bump up its total installed wind capacity from 979MW at the end of 2016.

Utility Enel Green Power Espana won 540MW of wind capacity and announced it would invest €600m in the project. Approximately 1,750GWh will be fed into the Spanish market as a result.

The AEE spokeswoman said projects would not receive incentives but would be inside the regulated environment. The government has committed to allow reasonable profitability for projects for 25 years. So when the parameters are reassessed in 2019 it could choose to support projects if circumstances have changed.

“If wholesale prices drop then the law gives the government opportunity to give compensation,” she said.

Legal complaints

Solar producers had failed in their legal bid to halt the auction on the grounds the rules meant the technology would lose out to the wind sector.

Subsequently the Spanish Photovoltaic Union (UNEF) said it would complain to the European Commission’s director general for competition on the grounds that the result proved its sector had been discriminated against.

The auction had been described as “technologically neutral” by the government, in that all renewable sources had access to the same capacity.

Capacity was awarded to the bids with the biggest discount to prices set out by the government for each technology. All of the capacity was won with maximum discount.

In the case of a tie, capacity was awarded to the bids that offered the highest MWh rather than capacity, and this system favoured wind. jon.stibbs@icis.com

By Jon Stibbs