Tenders / Auctions: Economic Regime for Renewable Energies

• RD 413/2014
• RDL 23/2020
• RD 960/2020
• Order 1116/2020
• Resolution of 10 December 2020 of the State Secretarial for Energy

In November 2020, Spain introduced a new support scheme for RES-E called Economic Regime for Renewable Energies (RD 960/2020). The support scheme shall be allocated through auctions. 

The first auction round took place in January 2021. The main objective of the auction is to allocate the new support scheme through a competitive, market-driven mechanism. The lowest bids will receive a premium (sliding feed-in premium - CfD), which results from the awarding price, corrected by a market adjustment percentage that aims to incentivize the participation in the wholesale electricity market. 

The exact formulas are introduced in RD 960/2020 and Order 1161/2020. The system also encourages to produce and dispatch RE electricity at peak price hours in order to reduce the overall price that consumers pay. The regulation sets a limit: the maximum delivery period in which successful bidders can perceive the support scheme is between 10 and 15 years, depending on the technology. 

For exceptional cases, such as technologies with high initial CAPEX, the period can be extended up to 20 years. Potential bidders can only participate when MITECO calls for auction rounds. It is expected that every year an auction round, at least, will take place to comply with the goals set in the NECP (Order 1161/2020). 

This support scheme is not compatible with the former “Specific Remuneration Scheme” (RD 413/2014) nor with aid granted for the same purpose or linked to the same investment.

Installed capacity

Sliding feed-in premium (also called Contracts for Difference – CfD)

The first round under the new auction scheme was opened to developers of installations for the production of electricity from RE sources, cogeneration and waste of multiple technologies. These installations can be new ones but also and extension or modification of an existing installation. There was two auctions rounds for 2021 and other two for 2022. Since then, the process has come to a standstill.

RES-E producers who want to get the support shall participate in one of the auction rounds organized by the authorities, published in MITECO. RD 960/2020 regulates an accessible economic regime for the production of electricity from renewable energy sources through an auction mechanism. for electricity production facilities from renewable energy sources through an auction mechanism. renewable energy sources through an auction mechanism.

Order IET/1161/2020,  regulate the auction mechanism for the granting of the economic regime for renewable energies in line with Art 4. of RD 960/2020. and establishing the indicative calendar for the period 2020-2025. Among other aspects, the technologies, conditions and guarantees for participating in the auction, the product to be auctioned, as well as the parameters and other elements that configure and specify the economic regime for renewable energies.

The auction will be published by MITECO by the Secretary of State for Energy . The product to be auctioned will be the installed power, electric energy or a combination of both, and the bid variable will be the price per unit of electric energy expressed in euros/MWh.  The auction will be administered by OMIE, either directly or through one of its subsidiaries and the Spanish National Regulatory Agency (CNMC) will supervise the process for the sake of transparency and thoroughness.

The auctions will be open to all renewable technologies included in the scope of application of RD 960/2020, of November 3, located in the peninsular electricity system, although, in accordance with the provisions of Article 3.2 of said Royal Decree, different quotas may be established for the same auction, aimed at different technologies or categories distinguishable by their specificities.

The award process will be carried out through a closed envelope auction method, according to a pay-as-bid mechanism. sealed bid, under a pay-as-you-bid mechanism. The agents interested in participating in the auction must submit to the auction administrator the guarantees for participation in the auction and fulfill all requirements under the terms regulated in the implementing regulations.  Prior to the holding of the auction of the auction, the interested party may withdraw its application, and in this case the cancellation of the guarantee for the cancellation of the guarantee required to participate.

In the resolution of the Secretary of State for Energy calling the auction, a maximum price will be set in the auction is called, a maximum price shall be fixed. Also, a minimum price can be established. Lastly, the order regulating the auction mechanism may establish the necessary particularities and adaptations in the selection and adaptations necessary in the methodology for the selection of the bids.

Once the bidding process has been carried out and the auction has been held in accordance with the established rules, the entity administering the auction (OMIE) shall proceed to determine the result of the auction. The final results of the auction will be published in the official gazette of the state (BOE).

Last of all, in the case of small-scale RE units and pilot projects, the order regulating the auction mechanism may provide for and exemption from the competitive concurrence competitive concurrence procedure for the awarding of the aforementioned remuneration retributive frameworks. 

• MITECO
• OMIE
• CNMC