Spain’s 4th Renewables Auction, A Major Disappointment

• MITECO awards only 45.5 MW onshore wind energy capacity for Spain's 3.3 GW, 4^th renewable energy auction
• It attributed the low level of participation on current economic context in the wake of war in Ukraine
• High electricity prices, inflation, rising interest rates and raw material sourcing challenges are also on the list

The Ministry for the Ecological Transition and the Demographic Challenge (MITECO) in Spain has blamed the 'economic context marked by the war in Ukraine that has conditioned the bids of the participants and the results' for the dismal results of its 3.3 GW, 4^th renewable energy auction with only 2 onshore wind projects winning 45.5 MW capacity.

Of the 3.3 GW on offer since August 2022 under the country's Renewable Energy Economic Regime (REER), solar PV had 1.8 GW and onshore wind 1.5 GW reserved. Winners were to enter 12-year power purchase agreements (PPA), starting from March 15, 2025 (see Spain Launches 4^th Renewable Energy Auction).

Now, the government has announced dividing the winning 45.5 MW capacity to the 2 onshore wind projects for a weighted average price of €42.78 per MWh. Minimum and maximum price range was €39.88 per MWh and €45.12 per MWh, respectively.

"The current situation, with high electricity market prices, high inflation, rising interest rates and tensions in raw materials and equipment, has resulted in an award of 45.5 MW of onshore wind power," said MITECO. "The auction control system has prevented the current economic situation from translating into award prices above structural levels during the 12-year duration of the REER for wind and photovoltaic energy."

Despite the disappointing results for this round, the ministry wants to go ahead with the planned auction schedule, factoring in the REER capacity not assigned until now. In fact, it will continue holding auctions till 2026 to enable installation of 60 GW renewable energy to account for 74% of the national energy mix by 2030 under Spain's National Integrated Energy and Climate Plan 2021-2030 (see Spain Plans To Tender 10 GW PV By 2025).

Between the 3 previous REER auction rounds concluded so far, MITECO counts having awarded 3.302 GW wind, 2.933 GW solar PV and 146 MW biomass capacity.