QAZAQ GREEN.  Only a tiny fraction of 3.3GW on offer was awarded in Spain’s latest renewables tender as a price cap of around €47 ($49) per MWh failed by far to “reflect the real cost of energy”, the country’s wind energy association (AEE) claimed.

“The energy transition must not be stopped. Auctions are a necessary tool for making progress in reducing energy dependence, reducing the price of electricity and decarbonisation.

- The current European energy crisis has generated an economic situation, which must be taken into account when considering auctions. The maximum price of this auction has failed to capture the current real cost of renewable energy and, as a result, only 45 MW of the 3,300 MW auctioned have been awarded.

- It is important that the volume not awarded in this auction is not lost and that future auctions reflect the real price of energy, incorporating mechanisms that reduce the risk for participants, to ensure that progress continues to be made towards the objectives of the PNIEC.

- Regardless of the price of renewable technologies at any given time, which may be affected by inflation and other supply chain factors, it will always be cheaper than any fossil technology, automatically generating savings for the citizen, in addition to savings on fossil imports and CO2 emissions.

- The pace of the administrative processing of renewable projects is an increasingly important factor in the decision making of auction participants, so an acceleration of permitting is essential to ensure the success of future auctions.

The failure to take into account inflation, which has impacted on the costs of new renewable installations and the outlook for future electricity prices, has been a determining factor in the low auction allotment.

In last year's auction, the limit should have been around 40 €/MWh, 78% of the value of the 2025 future, while in this one, with a limit around 47 €/MWh, it only reflected 53% of the value of the 2025 future.

Higher prices for raw materials and logistics in the sector's value chain, as well as cumulative inflation, have driven up the values of the bids made in the auction. As some of the leading wind turbine manufacturers argue, the wind industry cannot be unaffected by the rising costs of raw materials and the logistics of transporting wind turbine components. Like any other production sector, it cannot operate in the red.

Along with the rising costs of the technologies, another important aspect is the lack of projects with permits for their rapid start-up. The slow pace in the processing of projects and the prospect of losing almost 20 GW of wind projects because the administrations have not processed them in a timely manner is another problem that must be solved so that in future calls for proposals there will be more projects competing.

The objective of reaching 40 GW of wind energy by 2025 seems complicated and the wind energy sector insists that the project processing times must be speeded up and the problem of the backlog of files in the administrations must be solved.

It is also important that the megawatts not awarded in this auction are not lost and that they are auctioned again in future calls for tenders once the maximum price has been adjusted to the real costs of energy and technologies at that time.

The sector will continue to work to fulfil its commitment to Spanish society to do everything possible to reduce the cost of electricity, achieve the target of 74% renewable energy in the electricity sector by 2030 and make the energy transition possible by 2050, AEE said.