Spain has been pursuing a major programme for more than two years to buy large quantities of renewable electricity at a fixed price. The goal is to shield the country from rising power costs and lower its operating expenses, which represent a significant portion of industrial spending. The project aims to make renewable energy purchasing more predictable through large-scale auctions run by private companies within the Spanish market. Yet the process has faced delays, and bidders have paused until the government confirms there are no obstacles on financial and regulatory fronts.
Association of Large Energy Consumers of Spain (AEGE), a group uniting nearly thirty large industrial players, expects the Ministry for Ecological Transition and the Tax Agency to approve tender conditions favorable to energy producers, renewable energy suppliers, and industrial buyers. If the regulatory framework remains uncertain, electro-intensive manufacturers may refrain from proceeding with the big electricity purchase.
“If regulatory and tax doubts persist, we will not move forward with the auction. It cannot proceed without binding terms for all participants,” said the AEGE managing director, speaking to the press. The entire process remains on hold until the Tax Agency and the Ministry clarify the issues. If tax rules and sector-specific regulations do not align with industry needs, the project may be abandoned.
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Taxation and regulation
The business group plans to keep engaging with the government over the coming weeks to obtain clarity on how the renewal energy auction will operate. AEGE seeks confirmation from the Tax Agency that the pricing framework applies to physical energy rather than financial instruments, which would be less advantageous.
Regulations currently do not allow a single user to have more than one energy supplier. To run the auction, electro-intensive employers need confirmation from Ecological Transition that the proposal is legally sound as designed or a commitment to regulatory changes that would enable it. “As long as doubts of this scale persist, the project cannot advance,” González noted, acknowledging there is no fallback plan if the auction is canceled.
Originally slated for early 2022 and expected to occur at various times in 2023, organizers have paused the auction with the earliest possible start in 2024. The remaining framework has been outlined, and if the government grants approval on financial and regulatory grounds, the process could begin in about three months, AEGE indicated.
Maintaining price stability
Electro-intensive groups, including major players like ArcelorMittal, Acerinox, Sidenor, Sener, Ferroatlántica, and Tubos Reunidos, are exploring an independent renewable energy auction system outside government schemes. The objective is to secure a substantial share of their electricity needs at a fixed price over a long horizon of 10 to 12 years.
Today, roughly 80 percent of electricity used by large Spanish industry is bought on the wholesale market, exposing firms to price volatility and potential spikes in production costs. The plans call for wind and solar developers to bid fixed-price offers, with the resulting energy sales agreements approved by the state through FERGEI, the Fund for Guarantees of Electro-Intensive Enterprises.