Spain renewable energy auction achieves record low wind price

In the first of the country’s new renewable energy auctions, Spain’s Ministry for Ecological Transition awarded over 3GW of solar and wind capacity, including over 2GW of solar PV and Europe’s lowest onshore wind energy bid at a price of €20/MWh.

In its National Energy and Climate Plan (NECP) the Spanish Government set out plans to reduce greenhouse gas emissions by 23% compared to 1990 levels and predicted that the country’s renewable energy capacity would account for 42% of its total energy mix, and generate 74% of its electricity, by 2030.

Spain also pledged in its NECP to increase its onshore wind energy capacity from 28GW today to 50GW by 2030.

Spain also decided to change its auction design for renewable energies and use Contracts for Difference as the new auction model, leading to the first new auction held on January 26. Spain is set to auction off at least 1.5GW annually between 2021 and 2025.

The latest auction awarded contracts under three separate pots – a wind only pot, a solar PV only pot, and a technology neutral pot.

At the end of the day, the wind only pot awarded 998MW of capacity, including a record low tender price for onshore wind of €20/MWh. The total bids for wind energy ranged from €20/MWh to €28.89/MWh.

“Spain has delivered the lowest prices ever seen for onshore wind in Europe,” said Giles Dickson, CEO of European wind energy trade body WindEurope.

“The European wind industry continues to reduce costs through innovation, scale and learning effects. And major credit is due also to the Spanish Government here for using Contracts-for-Difference (CfDs) as their new auction model.

CfD auctions deliver the lowest prices for renewables because they minimise the financing costs.  And they’re cheap for governments, as governments get paid back as well as paying out.

So citizens win twice, both as consumers and taxpayers.”

Wind energy developers were unable to win any of the contracts from the third, technology neutral pot, with solar PV picking up the whole allotment and walking away from the auction with a total of 2,036MW.

The average price for successful solar PV bids was €24.4/MWh with the lowest price from the auction coming in at €14.8/MWh.

Impressively, a total of 84 companies offered bids totalling 9.7GW, well and truly oversubscribing the auction and reflecting the significant interest in renewables in Spain.

“The positive results of this first auction show all the potential that renewables have in our country.

Being the cheapest source of generation, incorporating clean sources into the system quickly translates into savings for homes, companies and industries,” said Spanish Ecological Transition Minister, Teresa Ribera.