Large-scale buyers in the energy sector have been preparing for months to lock in renewable electricity at a fixed price, aiming to shield themselves from price spikes and curb energy costs. Yet the ambitious renewable energy mega-auction, driven by private companies and originally set for the first quarter of this year, has faced repeated delays and will now be postponed to 2023, according to major industry groups.
The Spanish Association of Large Energy Consumption Companies, AEGE, which groups about thirty major industrial players, maintains that the tender cannot proceed before February or March 2023 despite the pressing need for stable electricity contracts and a persistently rising price trend.
The bidding has slowed in recent months because OMIE, the operator of the wholesale electricity market charged with administering the tender, has been overwhelmed by a flood of new workloads triggered by government measures to curb electricity costs. The latest delay, pushing the auction into the following year, comes as the government signals it will run its own renewable energy tenders in October and November, a move that could dampen demand for proposals from industrial buyers.
“Our initial target was September, but the government’s call for renewable energy tenders forced a postponement. There was a risk of cannibalization”, explained Fernando Soto, managing director of AEGE, which represents giants like ArcelorMittal, Acerinox, Sidenor, Sener, Ferroatlántica, and Tubos Reunidos.
Associations representing electro-intensive groups are pursuing an alternative auction framework for renewable energy, separate from the government-run program. The goal is to secure a substantial portion of their electricity needs at a fixed price over a long horizon of 10 to 12 years, a stark contrast to the current wholesale price of around 300 euros per MWh. This price point has been shaping the market and driving strategic planning among industrial buyers.
The photo caption accompanying industry reporting shows an operator in a steel mill, underscoring the real-world impact on heavy manufacturing and energy-intensive sectors. AEGE and its members argue that industrial demand and supply commitments must be aligned with long-term stability to maintain competitiveness.
There is expectation that industrial firms will sign agreements with renewable utilities through a sequence of auctions totaling at least 2,000 MW, followed by periods of government-regulated procurement. The first round would require renewable projects to be ready within 18 months, meaning readiness around 2024 under the new schedule. This staggered approach aims to balance project development timelines with industrial purchasing needs.
Discussions are centered around bundling wind and solar offerings so that the resulting fixed-price electricity can be resold to industry through bilateral power purchase agreements, or PPAs. Such arrangements would typically receive state support to ensure price certainty and market resilience.
For years, major industries have warned that high electricity prices erode profitability and hinder competition with counterparts in other European nations. The current surge in energy costs, coupled with difficulties in closing favorable bilateral contracts, has intensified calls for timely, price-stable electricity. The proposed tender is viewed as a path to securing competitive electricity prices through 2024, while industry stakeholders emphasize the immediate need for affordability this year and beyond.
Discounts on receipt
As part of extraordinary measures to cushion the impact of rising electricity costs, the government has temporarily reduced toll charges by 80% for around 600 electricity-intensive companies. This relief is slated to continue through the end of the year. AEGE has urged the Ministry of Ecological Transition to extend the reduction through at least 2023.
The 80% toll reduction applies to the charges embedded in electricity invoices for grid distribution and transport networks, while a permanent 85% reduction on receipt charges remains in place to support the broader framework of renewable energy costs and non-peninsula subsidies. These measures are designed to ensure that the system’s debt is managed while consumer bills remain manageable for industrial users.