On 12 December 2020 the Resolution of 10 December 2020 of the Secretary of State for Energy [1] was published in the Spanish Official Gazette (BOE), calling the first auction for the awarding of the renewable energy remuneration scheme, in accordance with the provisions of Order TED/1161/2020 (Order of the Spanish Ministry for Ecological Transition and Demographic Challenge) of 4 December.

Order TED/1161/2020 of 4 December [2], which sets out provisions regarding the first auction mechanism to award the renewable energy remuneration scheme and establishes an approximate timeline for the period 2020-2025, in compliance with Section 4 of Royal Decree 960/2020 of 3 November [3] on the remuneration scheme of renewable energies for electricity production facilities, provides for an auction mechanism to award the renewable energy remuneration scheme (“REER”), setting out the features of such remuneration scheme, and establishes that the auctions held in accordance with the provisions of such ministerial order will be called by means of a resolution of the Secretary of State for Energy, which will be published in the Spanish Official Gazette (BOE).

Order TED/1161/2020 indicates, specifically, the following:

• The remuneration parameter values of the various technologies eligible to participate in the auctions called in implementation thereof.
• The specific elements of and the adjustments necessary in the general method for selecting bids in order to adapt it to the characteristics of the invitations to participate.
• The processes that make up the auction mechanism, including the matching mechanism to be used in order to take into account the existence of minimum product reserves to be awarded to different technologies or categories distinguishable according to their specific features, as well as the restrictions to ensure competition in the auction and the characteristics of the bids submitted by the agents participating in the competitive bid process.
• The processes and procedures relating to the REER Electronic Register (maximum period for submitting the request for pre-allocation status registration, the amount of the relevant financial guarantee, the necessary documentation to be provided for both pre-allocation and operation status registration in such Electronic Register, and the submission of the necessary information for the correct functioning of the REER, periodically and automatically, to the market operator and the system operator).
• The mechanism to monitor the viability and maturity of the projects by means of which the capacity allocated through the competitive bid mechanism materialises (identification of the facility and proof of obtaining the administrative approval for construction or an equivalent document).
• The penalties set forth in Section 20 of Royal Decree 960/2020, with the aim of incentivising the fulfilment of obligations in relation to the minimum auction energy acquired by the facilities awarded the REER.
• The approximate timeline of auctions for the period 2020-2025, which includes time periods, the frequency of the invitations to participate, the expected capacity and the technologies envisaged.

The auctions are open to all renewable technologies included in the scope of Royal Decree 960/2020 of 3 November, located in the mainland electricity system, although, as is stipulated in Section 3.2 of such Royal Decree, different quotas may be established for the same auction, intended for different technologies or categories distinguishable according to their specific features. Likewise, within each quota minimum product reserves may be established to be awarded to various technologies or categories distinguishable according to their specific features.

Specifically, the REER may be awarded to the renewable energy electricity generation facilities included in category b) of Section 2.1 of Royal Decree 413/2014 of 6 June, which governs the activity of electricity production using renewable energy sources, cogeneration and waste. Such facilities are as follows:

• Facilities using solar power as a primary energy source (photovoltaic and thermoelectric solar power).
• Facilities using wind power as a primary energy source (onshore and offshore).
• Facilities using geothermal, hydrothermal, aerothermal, wave, tidal, hot dry rock, ocean thermal and marine current power as a primary energy source.
• Hydroelectric power plants (with an installed capacity of 10 MW or less or more than 10 MW).
• Electric power or cogeneration plants using biomass from a specific source as their main fuel (it must account for at least 90% of the primary energy used) .
• Electric power or cogeneration plants using bioliquid made from biomass as their main fuel.
• Electric power or cogeneration plants using biomass from industrial facilities of the farming or forestry sector in certain areas as their main fuel.

The facility may comprise one or more of the above technologies.

The facility may be new or an extension or modification of an existing facility.

The facility eligible for the REER by means of the auctions called in accordance with the provisions of the Order must fulfil the following requirements:

a) It must be the result of new investment undertaken after the holding of the auction that results in the right to be awarded the REER, for which purpose the date of commencement of its construction must be after the date when such auction is held, the date of commencement of construction of the facility being the earliest of the following: the date of commencement of the construction works financed by the investment or the date of the first firm commitment for the order of equipment or any other commitment that makes the investment irreversible (the preparatory work for obtaining permits and the preparation of prior feasibility studies do not affect the determination of the date of commencement of the construction of the facility).

b) It must not have a storage system, or if it has a storage system, this must be used solely for the storage of the energy produced by the facility.

In the event of modification of the facility, it must have a minimum of 15 years (from final registration in the register of production facilities until the resolution calling an auction) and the modification must be significant in accordance with the terms of the invitation to participate in the auction (due to replacing essential equipment, exceeding an investment standard or meeting both requirements).

The product to be auctioned is at all times the installed capacity (as defined in Section 3 of Royal Decree 413/2014 of 6 June).

Requirements that must be met by the facilities that wish to be awarded the REER

Facilities that are able to participate in the auction and, where applicable, be awarded the REER, must meet the following requirements:

• They must be included in category b) of Section 2.1 of Royal Decree 413/2014.
• They must be new facilities or extensions of existing facilities (this invitation to participate does not stipulate that those parties who intend to modify existing facilities may participate).
• They must be located in the mainland electricity system.
• They must not have a storage system, or if they have a storage system, this must be used solely for the storage of the energy produced by the facility.

The deadline for submitting documentation for pre-qualification and qualification will be 19/01/2021 at 13:00.

3.000 MW, with a minimum reserve of 1,000 MW for photovoltaic technology and a further 1.000 MW for wind technology. The allocated maximum capacity will not exceed 3,180 MW.

The maximum size of an indivisible block that may be offered will be 180 MW.

The maximum capacity awarded to a company or business group may not exceed 1,500 MW.

The table below indicates, per technology, the following:

• The availability cut-off dates of the facility (if such deadline is not met the right to be awarded the REER will not be lost, but the guarantees will be partially enforced -depending on the amount of delay-).
• The cut-off dates for exclusion from the REER (if such deadline is not met the right to be awarded the REER will be lost and the guarantees will be enforced in full).
• The start date of the maximum delivery period and the maximum delivery period (during the maximum delivery period the facility must fulfil the obligation to sell the minimum auction energy -otherwise the penalties provided for in Section 19 of the Order TED/1161/2020 will apply-).

The established risk price, i.e., the minimum price, is 0 Euros MW/h.

The reserve price, i.e., the maximum price, is confidential (it will be made known to the OMIE when bidding opens).

The obligation is established to submit, together with the request for pre-allocation status registration in the REER Electronic Register (2 months after the holding of the auction), a strategic plan with forecasts of the impact on local employment and the value chain, which will be made public and which must include at least the information stipulated in Section Nine: (i) a description of the investments to be made; (ii) purchasing and procurement strategies; (iii) a forecast of direct and indirect employment; (iv) opportunities for the industrial value chain; (iv) circular economy strategy in relation to the treatment of equipment at the end of its useful life; and (v) analysis of carbon footprint.

This plan must be set out and updated in specific plans within a maximum period of three months from the end of the period for identifying the facilities.

There will be two separate and distinct processes of pre-qualification and qualification. Both processes will open on 15 December 2020 at 13:00 and the closing date of the period for submitting documentation in both processes is 19 January 2021 at 13:00.

Pre-qualification process 

Before starting the pre-qualification process, the representative of the company must request the certificate to access the auction system by completing the form included as Annex A of the Resolution.

To obtain pre-qualification, documentation must be completed electronically, which includes  (i) basic information of the requesting party, (ii) the request for the certificate to access the auction system, (iii) the document showing the powers of attorney of the person signing as representative (this must be a power of attorney containing the powers indicated in Annex D of the Resolution), (iv) the non-collusion agreement and (v) the non-disclosure agreement.

Once the participant has obtained pre-qualification, it may access the private information to qualify for the auction and may complete the qualification process.

Qualification process 

In the qualification process it will be necessary to submit additional documentation, mainly the following: (i) the maximum qualifying volume of each participant, which must not exceed the amount to be auctioned for each product quota; (ii) the document of acceptance and compliance with the auction rules; (iii) the statement of compliance in relation to belonging to a business group and, in particular, the guarantees correctly provided, for an amount of 60 Euros/kW, for the capacity for which it is intended to submit a bid.