Coldness in the renewable sector before the auction of October 19 for the Government’s measures to lower the electricity

According to sources from the renewable sector consulted by EL ESPAÑOL-Invertia, “there is no doubt that projects will be presented, because the auction is the only alternative where there are still no regulatory changes in the middle of the game, but the RD 17/2021 it has generated a lot of uncertainty in the sector. ”

“I notice a certain coldness among the project promoters,” he explains. Yann Dumont, CEO of the renewable energy consultancy Reolum Renewable Research. “It is not only because of the regulatory changes, which have put more obstacles in the construction of new projects or that do not make it very clear which PPAs are protected, it is also the conditions and the deadlines to finalize the projects in this new auction.”

Income projections

“Whether or not to go to the renewable auction will not only depend on the CAPEX and OPEX that my project has and the income projections,” he explains. Javier Revuelta, senior principal of AFRY Management Consulting, in the conference ‘Previous Analysis of the Renewable Auction’ organized by the association APPA Renewables.

“Now, in addition, we must have a novelty, the price signal sent by the Government” after the approval of the measures to lower the light.

For the expert, this means that “in situations of very high prices, of the resources that the Government manages to lower the cost of energy, one is to take money, or as the regulations say, reduce the windfall profit excessive to certain technologies, including renewables. “

That is “basically the risk that the investor can perceive in the long term, because I don’t think they are afraid of the period of life granted by these auctions, but there is a lot of life merchant beyond it, and that’s where there is more uncertainty. ”

Even so, “it is possible that there are offers at low prices, because everything can happen in the auction,” he concludes.

Risk premium

Renewable companies will attend next October 19 with offers that, in addition to including the rising cost of raw materials in recent months due to international tensions, will have a higher risk premium.

In that environment, “somewhat higher prices are expected and perhaps not as many projects prepared to meet more demanding start-up deadlines as in the auction last January, “add sources from the renewable sector.

All agree that the uncertainties generated by the Government have cooled the mood among developers, but even so “it is not expected that the 3,300 MW that have been offered will not be covered, as has happened in other countries such as Italy, for example. “.

“In addition, you have to make a difference between photovoltaic and wind projects, because their characteristics are different. In the first case, they may better comply with the conditions of the auction, but in wind, or they are projects that already got their quota in January past or very advanced stage or it will be difficult for them to attend “.

Its main obstacle is the administrative procedures. “They are the real bottleneck so that the energy transition can be carried out at the pace set by the PNIEC, if it is not solved, the projects will not be able to meet the deadlines.”

Anger from the electrics

The coldness of the renewable sector is joined by the anger of the large electricity companies, Iberdrola, Endesa and EDP, that, as the last attack against the government’s decision to force them to return the 2,600 million euros of their profits, they have complained in Brussels.

In a letter to the European Vice President, Frans Timmermans, and supported by Global Infrastructure Investors Association (GIIA), a global network of advisory firms, banks, law firms and investment funds, they point out that it “endangers the objectives” of the great green pacts for energy transition and emission reduction of the European Union.

A strong setback to the great driver of the Green New Deal that a few days ago I said at electrics that will stop crying and assume their responsibility in decarbonization of the economy.

The decision comes at the same time that Iberdrola announced that it was going to paralyze the ongoing bidding processes for goods and services associated with the construction of new renewable projects in Spain until a detailed evaluation of the economic viability of said projects.

Although they certainly remain excluding projects under the remuneration framework of these renewable auctions.

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