WindEurope has warned that increasing cost pressures and design flaws undermined the recent Spanish onshore wind auction, which awarded contracts to just 46MW of capacity.
WindEurope said a combination of current cost pressures and a flawed “secret” price cap were to blame.
“The main reason was the auction failed to take into account the increased costs of new wind energy projects,” a group statement read.
“Also the Spanish ran this auction with a ‘secret’ price cap. The wind farm developers had to guess what the cap was.
“At the same time they also had to reflect the current inflation, supply chain bottlenecks and high raw material and shipping costs in their bids. We still don’t know what the secret cap was. We assume from the results that it was around €47/MWh. Most wind energy developers bid above this level. Which is not surprising – €47 doesn’t cover current costs.”
WindEurope said that the results send a warning signal to other European governments that have not yet reflected the reality of higher costs in their national auctions. Just recently, the German wind energy association warned that the current ceiling price in Germany could lead to similarly low auction results.
The few successful bids had an average price of €42.78/MWh. This is much higher than the prices in previous Spanish onshore wind auctions. In the January 2021 auction, Spain recorded bids as low as €20/MWh.
“To make up for this lost auction, Spain must now ensure they get it right in the next one,” said WindEurope CEO Giles Dickson.
“Crucially they need to change the flawed ‘secret’ price cap mechanism. And they must grant more permits for new wind farms.
“Up to 2000 wind energy projects are stuck in permitting in Spain. Especially worrying: 19 GW of new onshore wind projects urgently need to get their Environmental Impact Assessments (EIAs) approved. If they are not approved before 23 January 2022, these projects have to start the EIA process again. That’ll delay them by 2-3 years.
“All future auctions should also be indexed to reflect possible increases in commodity prices. That does not only apply to Spanish auctions. Other governments in Europe should take note of the higher costs for new wind projects as well,” Dickson added.