Auction brings air to Spanish sector

SPAIN: Spain will hold its first ever wind power auction today, with licences for 500MW under the hammer, ending a moratorium on new renewable energy project licences in place since 2012.

Licences for 500MW of wind capacity will be auctioned
Licences for 500MW of wind capacity will be auctioned

Utility giants Iberdrola, Gas Natural Fenosa and EDP Renovaveis, have confirmed they have bids lined up, with combined projects so far in excess of the 500MW limit.

"Many, many more bids" are likely, a spokeswoman fo Spanish wind energy association AEE told Windpower Monthly, explaining that more than 10GW of advanced projects across Spain were cast into deep-freeze in 2012.

The auction bids are based on the capital expenditure (Capex) per megawatt installed, instead of the more usual power price.

Candidates bid downward on a starting Capex set at €1.1 million/MW. "We've never seen such an auction. It's all unknown terrain," said AEE, adding that independent agencies put the market standard at €1.2-1.3 million/MW.

Winners will receive the same new subsidy introduced last year, based on plant investment. The subsidy aims to guarantee plant profitability at 7.5%. This translates into generation prices currently ranging between €76-€89/MWh, depending on plant type. The lower end matches the lower capex bids.

The auction was initially scheduled for November 2015 but was delayed until after the December 20 general election.

With a post-electoral impasse in forming a new government coalition, there is still no news of further auctions, although government planning last year aimed at 6.5GW of new wind to 2020, in addition to the existing 23GW.

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