Spain returns to wind energy with record low prices

18.05.2017

In Spain's latest renewable energy auction nearly all of the 3 GW available was awarded to wind energy. The auction resulted in contracts for €43/MWh, the maximum discount rate allowed under the Spanish tendering system. This is the lowest level ever awarded in an onshore wind tender in Europe
 
“The tender results show how onshore wind is today the cheapest option for new power generation. Some may think wind energy no longer needs subsidies.  But it was the fact the auction offered a guaranteed minimum income that attracted investors and ensured there were enough bids to deliver the low price.  And this is the point - it's not subsidies but revenue stabilisation mechanisms, addressing the risk of wholesale price volatility, that will be critical to the deployment of onshore wind across Europe at competitive costs.  By offering revenue stability, auctions play a crucial role in enabling investors to finance a project - they're key to making projects happen” said Giles Dickson, CEO of WindEurope.

The industry welcomes the results of the Spanish auction as a positive development. It comes after a 3-year market standstill triggered by retroactive cuts to the Spanish feed-in tariff in 2013. The paralysis has put at risk the prospect of Spain complying with its 2020 EU renewable energy target.  Spain now needs to deploy additional megawatts if it is to meet its EU commitments.

Dickson added: “Today’s auction is an important step towards restoring confidence in the Spanish wind market.  But there's still some way to go.  Spain should drop the practice of changing the “reasonable return” of projects every six years - it creates instability for both existing and new projects.  And the industry looks forward to a clear schedule for future tenders.  Visibility on the tender pipeline and deployment volumes is key for investment decisions. Ultimately, well designed tenders and a clear pipeline help reap the economic benefits the wind industry brings the Spanish economy - 22,000 jobs and billions of export revenue."

WindEurope

Similar Entries

The first onshore wind tender in Germany awarded 807 MW at an weighted average price of EUR 57.1/MWh (photo: iSTock)

The first onshore wind tender in Germany, under the reformed renewable energy law (EEG), awarded 807 MW at an weighted average price of EUR 57.1/MWh

Wind power has been awarded 1,128 MW of the total of 5,037 MW in the Spanish tender held yesterday. This gives continuity to the industry's activity in order to achieve compliance with European targets. The sector is confident that all players involved - developers, manufacturers, financial institutions, local and state public entities, etc. - will work hand in hand so that all projects awarded in the last three tenders are fully functioning by the end of December 2019. It will be then when the effectiveness of the tenders will be proved. The Spanish Wind Energy Association (AEE) estimates that the installation of these projects will translate into investments in excess of 4.5 billion Euros and the creation of between 25,000 to 30,000 jobs during construction.

NORD/LB Norddeutsche Landesbank successfully financed the 650 MW Markbygden project located in Norrbottens, North Sweden. The project will be the largest single onshore wind farm in Europe with a total investment of approximately EUR 800m. The project financing is close of EUR 500m and has been structured as a combination of commercial debt and development finance. NORD/LB acted as Mandated Lead Arranger and ECA advisor to the sponsors helping to structure the tranche covered by Euler Hermes. The total debt package was provided by the European Investment Bank, NORD/LB, KfW Ipex and HSH Nordbank. Euler Hermes is providing political and commercial risk insurance.

Verano Capital, an American project developer headquartered in Santiago, announced today that the 47 MW solar project they initially developed was selected in Chile’s latest energy tender with a winning bid at $25.38/MWh, the lowest 24/7 block price combining solar and wind ever recorded in the history of energy tenders.