The date has yet to be set, but the Spanish wind energy association (AEE) said a €21 million budget had been set for the auction.
According to AEE, new capacity and repowering projects can bid in the auction.
The trade body said the 500MW total was acknowledgement by the government that it needs more wind, but it is not enough to reach 2020 targets.
AEE also warned projects involved in this auction could also be subject to an economic change in 2019, due to Spanish law, meaning developers would be unsure of project profitability beyond this point.
AEE said it hopes it can now work with the government to improve the system and reestablish a growing market in Spain.
In June 2014, Spain's government passed a retroactive law cutting support for renewable energy projects, including existing capacity. The cuts, part of deep austerity measures in the country, have ground a once burgeoning wind industry to practically a standstill.
Last year, just 28MW of onshore wind was added it its 22.9GW total capacity – most of which was installed in a pre-2008 boom.