Assessing the design and the outcome of the new renewable electricity auctions in Spain

Abstract

Similarly to other countries in the EU, Spain has very ambitious renewable electricity targets for the 2030 timeframe. According to its National Climate and Energy Plan, 74% of electricity will have to be generated from renewable electricity sources. This means that around 60 GW of new renewable electricity capacity (mostly wind and solar PV) will have to be deployed in the next decade, which will certainly be a challenge. Auctions are the main instrument to reach those targets. A radically different design of the auctions was adopted in 2020 and already four auctions have been conducted with the new design. Based on an analysis of official data and secondary sources, the aim of this article is to assess the main design features and the outcome of those auctions. The design of the auction is considered to be appropriate. However, the ex-ante effectiveness of the auction has decreased over the auction rounds. Similarly, support cost efficiency was very high in the first auction and decreased over auction rounds (higher bid prices) due to the higher costs of materials, logistics and financing. Finally, technological and actor diversity have been low in most auctions.