This industry has spent more than a year preparing for a major purchase of renewable electricity at a fixed price to shield itself from price hikes and reduce electricity costs. Delays persist in the first major auction for renewable energy promoted by private firms in Spain. Initially set for early 2022 and then pushed to later in 2023, organizers have now postponed the bidding to the end of the year.
Nearly thirty large industrial groups operating in Spain are joining forces through the Spanish Association of Major Energy Consumption Companies, AEGE, to ensure the auction is nearly finalized. The plan now hinges on aligning the exact mechanism with the government, the Ministry for Ecological Transition, the Ministry of Finance, and regulators such as the National Markets and Competition Commission and the National Commission of the Stock Market.
Once these final details are resolved with the administration, AEGE will launch an information phase for those wishing to sell renewable electricity and begin a two to three month pre-qualification process for participants. The employer avoids fixing a tender timetable, but the date is expected to be set after the summer, with a last quarter launch likely.
The major electricity users association notes that the postponement is separate from the upcoming general elections on July 23. Pedro González, AEGE’s managing director, emphasizes that election progress is not involved and that all details must be resolved to run the auction with full guarantees.
Shield against rising costs
The electro-intensive sector, including leaders such as ArcelorMittal, Acerinox, Sidenor, Sener, Ferroatlántica, and Tubos Reunidos, is developing its own renewable energy auction system outside the government framework. The goal is to secure a substantial portion of their electricity supply at a fixed price for a long period, typically 10 to 12 years.
Today, around 80 percent of electricity for large Spanish industries is bought directly from the wholesale market. When prices spike, these users bear the brunt through higher production costs and volatility.
Plans involve inviting wind and photovoltaic manufacturers to submit fixed price offers. Subsequently, industrial and power companies would sign bilateral energy purchase agreements, or PPAs, receiving government approval through the Spanish Reserve Fund for Guarantees of Electro-intensive Enterprises (FERGEI).
For years, major industries have warned that high electricity prices erode profitability and hinder competitiveness with firms from other European nations. The problem is worsened by the ongoing energy crisis and the difficulty of closing favorable bilateral contracts with power suppliers.
Pending legal reforms
The rapid pace of July elections could affect several regulations tied to industrial groups that are heavy electricity users, influencing bill reductions, compensations, and targeted assistance for energy costs. New rules affecting electro-intensive devices may be approved by the government after the election date, possibly through royal decrees or ministerial orders. The executive holds the authority to finalize such legislative texts.
The government plans to present a royal decree to reformulate the Status of Electro-Intensive Consumers, aligning it with upcoming EU aid rules. Beneficiary sectors will expand, and the number of companies receiving invoice relief is set to rise sharply.
Aiming to mitigate electricity cost shocks, an 80 percent toll reduction for electro-intensive companies is under discussion to extend beyond June. AEGE is pressing for this relief to continue through at least 2023.
Additionally, large industries benefit from an annual aid scheme to offset indirect CO2 costs. The government has approved 244 million euros for this year, matching last year’s distribution, but AEGE argues for an increase to 400–500 million to counter the surge in emission rights costs. The government has signaled openness to increasing the budget, though no formal decision date has been announced.