Spain has approved regulations to overhaul its renewable energy auction system, replacing the previous system from 2013. The country’s coalition government also plans to hold an auction before the end of this year.

Government ministers revealed plans for restructuring the auctions in January. The new structure asks companies to submit bids based on wholesale electricity production prices. It then guarantees the submitted energy price over 20 years, moving away from the previous capacity and investment-based model.

The government has also said it will soon issue a plan laying out expectations for generation capacity and technologies in the next five years of auctions. This would then be updated at least once per year.

The new regulations would also cover grid connections for power projects, as 430GW of planned wind and solar capacity await grid permits. The rules would establish temporary limits to generation permits that would expire if not complied with. This aims to prevent permit-related financial speculation.

Spain hopes energy auction changes will spur investment

The Spanish government set a goal to install 50GW of renewable generation by 2030 in its National Integrated Energy and Climate Plan. It hopes this will encourage the creation of more than 100,000 jobs.

A spokesperson for the Spanish Ministry for the Ecological Transition and the Demographic Challenge said: “The new regulations respond to the need to offer a stable framework that attracts investment and allows consumers to benefit directly from the reductions in the generation costs.”

The ministry estimated that up to 90% of the components for wind turbines, 60% of PV projects, or 80% of the solar thermal projects are domestically produced. Spain hosts several large renewable energy companies, such as Iberdrola. According to the International Energy Agency (IEA), Spain produced approximately 8.3% of its electricity from renewables in 2015.

Spanish Photovoltaic Union UNEF Director-General José Donoso said: “This decree moves us in the right direction to give certainty to renewable investors. These auctions will allow Spain to progress toward climate objectives, give competitive energy prices, and increase economic growth and employment.”

Spain must take advantage of its renewable potential to have cheaper electricity prices than neighbouring countries. In addition, for these auctions to develop optimally, they have to come with a process of streamlining administrative procedures.”