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Gigascale Spanish renewables tender fails as price cap doesn't 'reflect real cost of energy'

ReCharge|Bernd Radowitz |November 24, 2022
SpainElectricity Prices
Only 45MW 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 slow pace of permitting and processing also contributed to the failure of the auction.

Just 45MW of 3.3GW on offer awarded at latest auction because limit of $49/MWh was far too low, wind power body claims
 
Only 45MW 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 slow pace of permitting and processing also contributed to the failure of the auction.
 
The price cap neither took into account the impact of inflation on the costs of new renewable installations, nor the prospects for future electricity prices, the AEE said.
 
“The higher prices of raw materials and logistics in the sector's supply chain, as well as accumulated inflation, have driven the increase in the values ​​of the offers made at the auction,” the AEE said in a comment.
 
“As stated by some of the main wind turbine manufacturers, the wind industry cannot be immune to the rise in the costs of raw materials and the logistics of transporting the components of this technology.
 
“Like any other productive sector, it cannot ... more [truncated due to possible copyright]
     
Just 45MW of 3.3GW on offer awarded at latest auction because limit of $49/MWh was far too low, wind power body claims
 
Only 45MW 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 slow pace of permitting and processing also contributed to the failure of the auction.
 
The price cap neither took into account the impact of inflation on the costs of new renewable installations, nor the prospects for future electricity prices, the AEE said.
 
“The higher prices of raw materials and logistics in the sector's supply chain, as well as accumulated inflation, have driven the increase in the values ​​of the offers made at the auction,” the AEE said in a comment.
 
“As stated by some of the main wind turbine manufacturers, the wind industry cannot be immune to the rise in the costs of raw materials and the logistics of transporting the components of this technology.
 
“Like any other productive sector, it cannot function in the red.”
 
Taking current and future cost inflation until 2025 into account, the price cap at the latest tender should have been about 53% higher, the AEE calculated.
 
With inflation rates until recently at around 2% or less per year, inflation so far had not been factored into European tendering schemes, and governments are only slowly waking up to the problem, while annual eurozone inflation has topped 10% recently.
 
In Germany – where the latest onshore wind auction with a price cap of €58.80/MWh was also heavily undersubscribed – the country’s wind association (BWE) has suggested raising the cap to €82.30/MWh, which was acknowledged by the economics and climate ministry. But the BWE yesterday also demanded the cap should be indexed to producer price inflation to make tenders “future-proof.”
 
In Latin American countries such as Brazil, which traditionally have been struggling with higher inflation rates, feed-in tariffs (FITs) granted in tenders are usually indexed to the local consumer price index to protect investors.
 
The lack of permits due to the slow pace of processing projects in Spain also was a factor in the failure of the tender, the AEE said.
 
Some 20GW of wind projects have not been processed in a timely manner, endangering Spain’s target to boost its wind power capacity to 40GW by 2025 (from 28.2GW in 2021), the association estimated.
 
The AEE demanded that the volume not awarded in the latest auction should be offered again in future tenders, once the price cap has been adjusted to the actual cost of energy and technologies.

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Source:https://www.rechargenews.com/…

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