Portugal plans to kickstart next month the solar tender it had postponed as the country began its campaign to contain the COVID-19 emergency, the government has confirmed.Contacted by PV Tech today, a spokesperson from Portugal’s Environment Ministry said that the 700MW solar auction launch – initially due in late March – will take place instead on 8 June 2020, with plans to reveal the winners by the end of August.In late March, before this week’s confirmation of the move from a spring to a summer timetable, the Portuguese government had walked PV Tech (see below) through its reasons to postpone the solar tender.Interviewed by this publication, Energy state secretary João Galamba had said the country was “ready to go” but had decided to “pause for the general situation to calm down”. Portugal would, Galamba said, wait until the market was “ready to participate in a full-fledged auction”.
State secretary Galamba on the rationale of postponing Portugal’s solar auction
“I don’t know if it will be a month or two months. The only thing I can say clearly is we are ready to go, we are just pausing for the general situation to calm down a bit. As soon as we sense the market is ready to participate in a full-fledged auction we will launch it”.“We want the auction to be as successful as the one last year so we will wait a little bit. It doesn’t make sense to launch it in the middle of this mess, especially since we are introducing the storage modality, which adds complexity.“The deadlines for [last year’s] auction winners were already suspended when the state of emergency was declared. If the state of emergency lasts a month, they will have an extra month.”“The general message we are sending to investors is no one will be penalised because of the pandemic situation – if for example someone cannot order equipment or that is delayed for a few months we will give those months of delay, we will create the conditions so that no one is penalised.”
The weeks since have seen Portugal discussed in media circles as the object of “international praise” for its COVID-19 response. Reports have credited the country’s early adoption of a lockdown with delivering lower per-inhabitant rates of virus cases and deaths than in other European neighbours.Speaking to PV Tech in late March, Galamba said the decision to delay was also motivated by the “added complexity” of this year’s auction. Where the 2019 tender was solar-specific, the 2020 successor will incorporate a modality for projects featuring an energy storage element.As the state secretary explained, projects under this third, storage-friendly modality will compete for the same 700MW contract pot alongside the two solar modalities (see table below) that were already present at last year’s solar auction.Held last July, the 1.15GW PV-only tender drew global attention after one winner produced record-low solar tariffs of €14.76/MWh. As it emerged months later at Solar Media events, the figure sparked disbelief in solar circles, with some describing it as a tariff developers “cannot survive on”
The inner workings of Portugal’s 700MW solar auction
1 – Now scheduled to launch on 8 June 2020, the upcoming tender will feature the following three modalities:
(1)Solar developers bidding for 15-year fixed-price PPAs (this is the category France’s Akuo Energy was part of when it scored the €14.76/MWh tariff)
(2)Solar developers accepting to pay in return for the right to produce at market prices, also for 15 years (this is the category Iberdrola was part of as it reaped 149MW in contracts)
(3)Storage developers: According to Galamba, the new modality will work as a “quid pro quo” insurance-type scheme. Storage developers will receive from the system an annual fixed price per MW installed; by competing in the auction, they will bid down the prices they are prepared to receive. In return, they will insure the system against price rises beyond a certain level, compensating it when market prices climb over strike prices.
2 – Where last year’s 1.15GW auction was open to projects all across the country, this year’s 700MW successor will exclusively target the southern regions of Alentejo and Algarve.
3 – According to Galamba, the government’s plan as of late March 2020 is that the 700MW solar tender will be followed by another exercise of 500MW (the figure is indicative) towards the end of this year.