The auction for a specific remuneration system allocation procedure for biomass and wind technology installations has been convened

The Government has published Royal Decree 947/2015 of 16 October and Order IET / 2212/2015 of 23 October, regulating the specific remuneration system allocation procedure’s auction for new biomass installations in the mainland electricity system, and for wind power plants.

On 17 and 24 October respectively, were published in the Official State Gazette: Royal Decree 947/2015 of 16 October, by which is convened an auction for new biomass installations in the mainland electricity system, and for wind power plants, to grant a specific remuneration system (from now on, “RD 947/2015 “), and its development regulations in the IET / 2212/2015 Order of 23 October, regulating the specific remuneration system allocation procedure for such installations, pursuant to Royal Decree 947/2015, of 16 October (from now on, “OM 2212/2015).

Also, on 29 October 2015, a notice of the Deputy Director General of Electric Energy has been published in the Official State Gazette, opening the hearing procedure on the elaboration of the Draft Resolution of the Secretary of State for Energy, requesting the specific remuneration system allocation procedure’s auction for biomass and wind power installations. The according procedure and rules are also established. This Draft Resolution can be found on the Ministry of Industry, Energy and Tourism website (available only in Spanish).

In accordance with the above regulation, the specific remuneration system will be given a determined power value, with established features and technology, and not being associated with any particular installation.

The auction is slated, solely, to new biomass installations and new or modified wind power plants, located in any area of the electrical system, without any recognizance of the right to receive the specific remuneration related to renewable energy, cogeneration or waste, before RD 947/2015 (17 October) enters into force .

In accordance with the procedure, the auctioned product will be the power (expressed in kW), that it will have the right to awareness of the specific remuneration system, which is limited to 200 MW in biomass installations and 500 MW in wind power plants. The concept to be auctioned will be the abatement rate applicable to the standard value of the initial investment of the reference rate installation.

The auction will take place on 26 November 2015, with a maximum of two hours to submit offers, unless otherwise agreed in the hearing for the Draft Resolution of the Secretary of State for Energy.

The auction would involve the following stages: shortlisting process, qualification process, auction, matching procedure and accepted product blocks determination process.

The Draft Resolution states that pre-qualified participants should set up sufficient, irrevocable and enforceable financial guarantees, at the first demand, on behalf and for the benefit of OMEL, in the amount of 20€/kW rating volume (the sum of the maximum amounts offered for each product), by cash deposit into OMEL’s account or through a joint surety or bond.

During the submission of tenders, the participant would set up the product’s sections they are willing to bid for, as an offer (biomass and wind kW). A section is a set of blocks offered during the introductory offers phase, with the same reduction rate percentage by a participant and the smallest unit of product that can be offered in an auction is a block (1 block is equivalent to 1 kW).

The auction shall be through a sealed envelope process with a margin system, meaning that the reduction percentage that applies to each successful tender will be the one from the last matched offer. In doing so, a simple matching process will be applied for the auctioned product in terms of buying offers against sale offers. In this way, the margin reduction percentage as well as the number of blocks accepted for each participant shall be obtained independently.

As a general rule, the product’s marginal reduction percentage will be equal to the system’s aggregate purchase curve and sale offer cut-off point percentage, and it will set up the reduction percentage for the standard investment value on the matched purchased sections.

OMEL DIVERSIFICACIÓN, S.A.U., (“OMEL”), the auction manager, will determine the successful tenderers, the allocated power, and the abatement rate applicable to the standard value of the reference rate installation initial investment, as a result of the matching proceeding carried out in the maximum of two hours since the period for receiving purchase offers is closed.

The CNMC, auction monitor, will have a maximum of 24 hours to validate OMEL’s results once it has received them. If the auction is declared valid, the General Directorate for Energy Policy and Mines (“GDEPM”) will issue a resolution to resolve the auction that will be published in the Official State Gazette.

Once the necessary guarantee is submitted (20€ kW allocated), the auction’s award will involve the right to register the allocated power as a pre-assignment in the Specific Remuneration System Register (“SRSR”).

Against the GDEPM resolution that determines the successful tenderers, the allocated power, and the abatement rate applicable to the standard value of the initial investment of the reference rate installation may only be pursued upon appeal raised with the Secretary of State for Energy within a month, once the resolution has been published in the Official State Gazette.

The successful tenderers will have a period of 45 business days from the publishing date of the resolution in the Official State Gazette to submit a pre-assignment request registration for the allocated power. The amount of 20 €/kW of allocated power is needed as a guarantee. Once the guarantee is verified as valid, the GDEPM will issue a resolution to inscribe holders and allocated powers in a pre-assignment condition, it also being published in the Official State Gazette.

The pre-assignment resolution’s publication date determines that the installation should be completed within a maximum period of 48 months. However, the operating state enrollment in the SRSR will require installation to be fully completed by the deadline established (48 months). In this regard, it is understood that an installation is fully completed if it has all the elements, facilities and infrastructure which are necessary to produce energy and pour it into the electrical system. Further, it must have obtained the definitive registration in the Administrative Register for Generation of Electrical Power Unit under the competent administrative body, having begun to pour electric energy, which requires that the manager must have provided a certificate attesting that it has begun to supply the network.

The specific remuneration system will accrue from the first day of the first month following the date on which the installation has obtained the status of final operating approval.