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Photovoltaic Auction Analysis Portugal 2019

26 de settembre de 2019

Photovoltaic solar energy reaches historical prices in European auctions. Between July and August of this year the minimum price of € 14.70 / MWh was reached at the photovoltaic energy auction in Portugal.

PORTUGUESE PHOTOVOLTAIC IN 2019.

At the end of 2018, Portugal presented a mix of 53.1% of renewables, compared to 46.9% of polluting fuels:

We already saw in the previous blog, the forecasts that Solar Power Europe granted to Portugal during the 2018-2023 period, in photovoltaic addiction capacity, granting Portugal the seventh place among the European states. At the total capacity in 2018 of 660 MW, it foresees an average scenario for 2023 of 4,525 MW of total capacity (which would represent a new capacity during the five-year period of 3,865 MW) and an annual growth component of 47%.

The auction, (object of this article) is part of Portugal's campaign for a solar boom, with plans to boost installed photovoltaic capacity from 572 MW in 2018, to 1.6 GW in 2021 and 8.1 GW-9.9 GW in 2030, according reports Pv Tech on 10/07/19.

According to the Portuguese government itself “in order to achieve national goals and objectives, a system of licensing auction for the production of energy from renewable sources will be implemented (…) In a scenario of strong demand for production licenses and shortage of network capacity, auctions are the best way to meet this demand, accelerating investment in new capacity, giving priority to projects with lower costs and higher guarantees of execution, which allows a better articulation between the licensing process and investments in new network capacity.

In this logic, the implementation of an auction system has a number of advantages:

1. It is a competitive and efficient mechanism that offers visibility of prices and quantities in the long term.
2. It reduces the risks for the producers, which results in the reduction of the cost of capital and, therefore, a reduction in the price.
3. It provides great flexibility in the design of the energy allocation mechanism to be installed.
4. It improves the efficiency of cost allocation by favoring more profitable technologies

PHOTOVOLTAIC SOLAR AUCTION IN PORTUGAL 2019

Powered by the Ministry of Environment and Energy Transition of Portugal through the
general direction of energy and geology.

Features:

Published Results:

Resume: 

Note:

The points that do not finish "blending" (24 lots-25 projects), are due to:

1. Lot number 11 had two companies by winning bidders: Iberdrola and Everstream.

2. Lot number 17 had no applications.

3. Lot 18 had two companies per awardee: Aura and Neon.

4. Lot number 21 had two companies per winner: Enerland and Made Better.

These data are taken from Leiloes Renovavies 

Iberdrola, Expoentfokus and Days of Luck come to be governed by the 2nd contracting modality (288 MW in total), while the rest of the winning companies will be governed by the fixed price or first modality (862 MW).

ANALYSIS ON PARTICIPATION OF SPANISH COMPANIES IN THE AUCTION:

 “The tender, which had to process 10 GW in solar offers, granted a significant part of the final total of 1.15 GW to Iberdrola of Spain under a second modality, where developers had to pay in exchange for the right to produce at market prices, also for 15 years.

Iberdrola promised contributions ranging from € 5.1-26.75 / MWh (around US $ 5.68-30 MWh) in exchange for 149 MW of contracts for its first Portuguese photovoltaic projects, which will be divided between Algarve and Valle del Tajo.

Iberdrola, already present in Portugal through its energy distribution business and the Támega hydroelectric project of 1,158 GW, was the main but not the only winner of the second auction category, with a separate 110 MW project that committed payments to the € 25.46 / MWh network (around US $ 28 / MWh). ”Pv Tech 08/08/2019.

“In the auction the Spanish company Solaria was also awarded, which has been made with a nominal power of 49 MW of photovoltaic power. In this instance, the award, through Prodigy Orbyt, a Portuguese company wholly owned by Solaria, is associated with the reserve of connection capacity to the Public Utility Electricity Network and a specific remuneration regime for a period of 15 years, guaranteeing a price fixed for the energy supplied of 19.64 euros per MWh ”as reported by invertia.com

EPILOGUE:

We collect some of the echoes regarding the possible causes and repercussions of this record auction in Portugal, due to the special impact they may have on Spain.

El Pais.com, under the title of "Spain will copy the Portuguese auction model to lower the light" publishes an article on August 5, from which we extract the following paragraphs:

“The Ministry (of Spanish Ecological Transition) has decided to follow the Portuguese model and that the guideline used in the said auction can be repeated in Spain. The model consists of a descending system with two 15-year remuneration modes, one guaranteed and the other general. In the first one a discount was offered on the maximum established rate and the second is based on the fact that the project must have a contract of sale and with economic contributions to the Portuguese electricity system (…) But adapting this model means that the current regulations will have to be reformed "

The article points as a determining factor in the fall in auction prices to technological improvement: “The trend indicates that solar energy auctions will be closing at lower prices as technology has become more and more Cheap and growing projects.

Renewable generation already has a production cost much lower than the average price of the wholesale market (...) This is a consequence of two effects:

The internalization of the cost of CO2 emissions in electricity prices, which is increasingly giving clearer signals for decarbonization.
and, above all, the spectacular cost reduction experienced in recent years by renewable technologies. ”

Energy Newspaper, article 10/09/2019 entitled "Four fundamental objectives of renewable auctions suitable for Spain" are summarized below:

a) Unlink the final price of electricity from the cost of emissions

b) Achieve price transparency

c) Reduce speculation at connection points

d) Increase competition and build trust for new entrants

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