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Spain has launched a tender for up to 3.18 gigawatts of renewable generation in its first auction under a pay-as-bid model introduced earlier this year.
The model, similar to the contracts-for-difference program used in the U.K., aims to correct problems with auctions in 2016 and 2017. Those earlier auctions encouraged prices so low that developers essentially had to turn to merchant markets or bilateral power-purchase agreements to make a profit, said Madrid-based Brian Gaylord, principal analyst for Latin America and Southern Europe at Wood Mackenzie Power & Renewables.
The 2016 and 2017 auctions followed years of minimal capacity additions caused by an unfavorable regulatory environment, and they came with the threat of price revisions every three years. That led some bidders to use the auctions as a way of securing capacity in order to sell energy on the open market.