Publications

Call for first auction of renewables under the new economic regime

Call for first auction of renewables under the new economic regime

  • 14/12/2020

1. Official Spanish Gazette No. 324 of 12 December 2020 has published the Resolution of 10 December 2020 convening for the first auction for the granting of the economic renewable energy regime designed in Royal Decree 960/2020, of 3 November and Ministerial Order TED/1161/2020 of 4 December (hereinafter, the Call). This new economic regime is based on the long-term recognition of an energy price.

CHP facilities are excluded but it is also waiting for a similar auction where to value its ability to channel hydrogen projects and to provide the essential legal certainty to this technology.

Together with public guarantees for PPAs and investment aid from ERDF Funds, this is the third instrument designed by the National Government to help meet the ambitious objectives of the 2021-2030 PNIEC (60 GW).

2. Pursuant to that Call, the deadline for submitting auction bids begins on 15 December 2020 and ends on 26 January 2021, the day on which the auction will be held from 9 a.m. to 11 a.m.

(a) Recipients: New projects (or significant modification of 15-year installations, or expansion of existing ones), which have not been initiated before the date of the auction. The project of a renewable facility (hereinafter, RE facility) must be renewable energy production (photovoltaic, thermosolar, wind, hydroelectric, biomass, biogas, bio-liquids, and other renewable energies – geothermal, hydrothermal, aerothermal, wave, tide, hot and dry rocks, ocean thermal and sea current energy) located in the peninsular electricity system and not having a storage system.

(b) Auctioned products:

(i) The price of the energy produced.

(ii) The volume of product awarded. The volume of energy to be auctioned is 3,000 MW of renewable energy alone, of which 1000 MW are intended for photovoltaics, 1,000 MW for onshore wind power and another 1000 MW without technological restriction. The volume of product awarded to the same company or business group may not exceed 1,500 MW.

(c) Auction development:

(i) Prequalification stage with participant’s information with a commitment to confidentiality and non-collusion, and training sessions.

(ii) Qualification stage where the participants have to indicate the maximum amount by which it may be offered for each of the auctioned products, as well as the contribution of the guarantees, adherence to the auction rules and responsible statement on membership of the business group.

(iii) Auction stage. Offers will be ordered starting with the lowest economic value until the quota is covered for each technology just mentioned. Offers above the reserve price (classified as confidential in this call, and which is the price considered for the sale of electricity in the pool would be excluded taking into account the spot market price, forward and technology cost), and below the risk price (0,00 €/MWh).

The auction proceedings must be reviewed both by OMIE and by the CNMC. The results will be public.

3. Obligations of the successful tenderer: The producer undertakes to sell the energy volume at the auction price (corrected with a “market adjustment”, which will be 25% for manageable technologies and 5% for unmanageable technologies) during the maximum delivery time. Both the auction price and the maximum delivery time will be immovable.

 

Technologies Initial moment Maximum delivery time (years)
Photovoltaic 30/09/2023 12
Solar Thermoelectric and onshore wind 30/09/2024 12
Offshore wind, hydroelectric and other renewables 30/09/2025 12
Biomass, biogas, bio-lyquids 30/09/2025 15

 

 

However, free participation in wholesale electricity pool may also occur where:

  • The volume of energy committed to the auction has been reached by the RE facility.
  • When the maximum delivery time has expired.
  • When the minimum energy volume has been waived or not, without prejudice to the corresponding penalties and seizures of guarantees.

 

It is important to consider two additional issues:

(a) The guarantees of origin associated with the auction energy of the RE facility shall be the property of the electrical system.

(b) The RE facilities may not receive other aid for the same purpose, nor may subscribe to PPAs, although perhaps it would be more reasonable refers this restriction regarding the energy committed in the auction.

4. Other successful tenderer’s obligations:

(a) Submit guarantees of 60 euros/kW.

(b) Submit within three months a strategic plan with:

  • Overview of the investments to be made;
  • Procurement strategy;
  • Estimate of direct and indirect employment creation during the construction and operation of the RE facilities;
  • Opportunities for the local, regional, national industrial value chain (percentage representing the economic valuation of the manufacture of equipment, supplies, assemblies, transport and other performance by companies located in those territorial areas);
  • Circular economy strategy in relation to the treatment of end-of-life equipment, and
  • Analysis of the carbon footprint during the life cycle of the installations, including manufacturing and transporting the main equipment that comprises them.

 

That plan shall be updated at the time of submission of an application for recording in the new Electronic Register of the Economic System of Renewable Energy in operation. This recording shall take place within a maximum period of one month from the deadline for availability of the installation or, where appropriate, the date of expulsion from the economic renewable energy system indicated in the call.

 

Technologies Installation availability deadline Date of expulsion from the renewable energy economic regime
Photovoltaic 28/02/2023 30/06/2023
Solar Thermoelectric, onshore wind 29/02/2024 30/06/2024
Other renewable technologies 28/02/2025 30/06/2025

 

 

(c) Filing of an application for recording in the new Electronic Register of the Renewable Energy Economic Regime in pre-allocation.

The time has therefore come to prepare, both legally advice and model the presentation of the tender, guarantees and strategic plan, and from a financial point of view, in order to avoid the risks of exclusion for legal, administrative and/or economic reasons.

From Fieldfisher JAUSAS we accompany our clients, advising from a regulatory, legal, economic and administrative point of view throughout the process, from the design, prequalification, auction and post-auction phase.

 

Clients describe the team as "very good, quick, responsive and professional."

CHAMBERS & PARTNERS (2018)

The team is praised by clients for its "knowledge of insolvency matters and focus on finding solutions."

CHAMBERS & PARTNERS (2018)

The lawyers are "able to co-ordinate the work with firms abroad to make sure it goes smoothly," and goes on to highlight the firm's "reasonable fees, even in situations with partner involvement."

CHAMBERS & PARTNERS (2018)

"The team's ability to focus on the matters stands out. The lawyers understand the business and combine this with a high level of technical expertise." Another client enthuses: "We really enjoy working with them. The service is excellent."

CHAMBERS & PARTNERS (2018)