At the start of the latest legislative session, the government introduced a bill aimed at a new type of auctions designed to boost renewable deployment. The plan promised macro tenders to guarantee fees for new green plants, establishing annual minimum volumes and a timetable extending to 2025. However, the energy crisis driven by record prices and a political pause caused by the election disrupted the timetable, and no auctions were held in the previous year.
Industry groups in the renewables sector have pressed the administration to reactivate the tender process as soon as possible and urged that the next round be awarded immediately. In early 2024, officials indicated that a second auction would be held the following year. The Ministry for Ecological Transition, which oversees these processes, has not confirmed the date for the upcoming tenders and has said that more clarity on electricity price movements and the administrative progress of hundreds of renewable plants is needed before proceeding.
Renewables are currently seeking auctions, but they are also asking the government to modify the design to make the process more attractive and to prevent a repeat of cancellations that occurred when the last call was issued in November 2022 amid the energy crisis. A tender for 3,300 megawatts of new wind and solar projects was later announced, but widespread concern from green energy companies led to only 45.5 MW being tendered.
All participating companies except two successful bidders, Elawan and Forestalia, submitted bids above the maximum permitted price. The exact cap is confidential, but tender results suggest it hovers near 46 euros per megawatt hour. Other participants were excluded for bidding higher than 50 euros. Wind and solar associations are calling for an increase in the maximum price in the next tender to better reflect current wholesale market prices.
Industry claims
Wind association AEE argues that the ceiling price should be publicly disclosed before the auction and raised to align with wholesale market realities. They also call for adjustments based on long term power purchase agreement forecasts for the next decade, currently around 58 euros per MWh. AEE notes that the design of the auction creates financing challenges for projects and stresses that participation must be encouraged with better conditions.
Spain’s Solar Power Association UNEF, the main employers’ representative for the solar sector, has officially submitted a reform proposal to the Ministry for Ecological Transition. The proposal calls for raising the maximum bid price and extending fixed price contracts for wind and solar from 12 years to 15 or 20 years. This shift is supported by sources within UNEF and reports from media outlets covering the industry.
UNEF also advocates for tender rules that reduce the risk of concentrated control by a single company. They propose a cap ensuring no single bidder can secure more than 30% of the tendered power in any portion of the process, to prevent the outcomes seen in earlier tenders where projects were not executed or were resold. They require that suggested green projects already have an approved environmental impact assessment to avoid speculative proposals, reserve 20% of the tendered power for small projects under 10 MW, and allocate a portion for storage initiatives. Additionally, UNEF requests a clearer schedule for future tenders and details on their sizes to inform plans for the next five years.
The government resists
Back in 2020, the government introduced a new auction model intended to spur renewable deployment. Companies offered a fixed price at which they would sell green energy into the grid for twelve years, providing price stability for consumers and predictable returns for developers. The average price for renewable tenders in that period stood near 30 euros per MWh.
After the disappointing results of the most recent tender, government officials attributed the outcome to high electricity market prices, inflation, rising interest rates, and volatility in raw materials and equipment costs. The manager overseeing the program argued that market volatility and price uncertainty during the energy crisis were the main factors behind the poor performance, rather than institutional issues. As such, the government indicated a reluctance to modify the auction design for future rounds, explaining that changes would not be made in coming appointments.
In their view, continued reliance on the current structure ensures stable operation even in volatile market conditions. They warn that maintaining the maximum price at a reasonable level is what prevents energy consumers from bearing higher costs over a prolonged period, given the twelve year horizon of the price mechanism.
The government has already conducted four tenders in recent years, including one in 2020, two in 2021, and another in 2022. Excluding a tender that nearly failed a little over a year ago, previous bids awarded 6,380 MW of new green capacity across wind, solar, and biomass projects, feeding electricity into the grid at stable prices that were typically lower than wholesale market levels.