This was one of the findings drawn yesterday during the conference “Renewables in 2017: new capacity auctions” organized in Madrid by APPA where outstanding sector experts analyzed the ministerial proposal and explained the necessary calculation methodology to bid in the next auction.
Elena Alonso Asensio. Madrid
Beatriz Trocolí, director of G-Advisory and responsible for the presentation “Facilities Remuneration and profitability “, explained that “it seems reasonable to assume that wind facilities are better positioned than photovoltaic ones in the next auction “. And she explains that according to calculations based on the Ministry of Energy proposal, with the same level of discount, the returns achieved by wind with appropriate resource are better than those achieved by photovoltaics.
Trocolí also noted that according to her estimates, the returns achieved by photovoltaic facilities with 1 and 2-axis tracking systems are similar for the different discount levels “and are somewhat more attractive than fixed installations.”
She also described the number of equivalent operating hours for photovoltaics set by the Order of the Ministry as “demanding” while recalling that it contains an error in the OPEX of the IT (or operating costs) in this same technology which, in addition have been confirmed by the CNMC.
G-Advisory director also warned that the fact that the minimum number of operation hours to perceive 100% coincides with the equivalent hours could lead to a risk of a reduction in the remuneration for some facilities.
The next auction
In any case, Trocolí said, if the auction is finally restricted to 2 GW, “it falls short” to meet the goals that Spain has set to reach 20% renewable share by 2020.
On the other hand, José Luis López Tafall, said that the auction model proposed by the Government is different from the rest of the countries one. For the Director of Regulation of Acciona this auction is “the icing on a cake that is called energy policy.”
Indeed, in his opinion the rest of countries having held auctions that have “worked well” have some common elements, which he listed:
– They have an energy planning in the medium or long term.
– They have a decarbonization strategy.”
– The auctions were not technologically neutral.
– They set an auction calendar.
– Guarantees and stability were granted.
A high level of uncertainty
Stability and uncertainty were precisely two of the concepts mostly repeated in the round table participated by López Tafall, “Regulatory implications of the auction”, moderated by Margarita de Gregorio of APPA and which also had the participation of Luis Pérez de Ayala, partner of Cuatrecasas, and Francisco Rodríguez, director of Regulation of Viesgo.
The three speakers agreed that despite these two circumstances the next auction will cover supply but it will not be, for example for Francisco Rodríguez, a sign of the path that renewables will follow in the future.
The director of Regulation of Viesgo pointed out that at present it is not that there is no politics of renewables promotion but there is no energy policy because what will happen with coal or nuclear is unknown. In his view, it is the ideal moment to reach a great agreement among all political forces with a view to 2030.
As for the possibility that the Final Energy Order takes into account the allegations presented by the sector, Rodriguez explained “it is not so much about what they can modify before as what they can modify later because everything can be subject to a revision.”
Regarding how this possibility could impact companies, Luis Pérez de Ayala said that the Ministry “makes its calculations so that this can become a catastrophe” while he stressed, “the sector has a great capacity for adaptation.”
Tafall wondered what the reason of this high level of uncertainty in the Spanish auction model is when if the objective is to reduce costs it is as simple as following the example of countries like Mexico. In his opinion, it is not possible to think otherwise than that the objective is another, for example, “the discretion of continuous adjustment, which is called risk premium,” he said.