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Portuguese solar auctions 2020

By June 19, 2020February 7th, 2021Public, Europe, Renewable Energy, Commentary, Insight, Iberia

We are pleased to present our latest Portuguese solar auctions 2020 commentary on the upcoming auction for solar and storage systems.

Highlights of our key thoughts include:

  • Compared to the 2019 auction, a new flexibility option will be included to provide capacity payments (€/MW/year) to solar plus storage while providing an insurance against price spikes to the system through a one-way CfD
  • In the 2019 auction, 75% of allocated capacities opted for the guaranteed remuneration scheme. Considering the current uncertainty from COVID 19, this scheme is likely to remain a preferred option in this year’s auction
  • We expect similar levels of competitiveness in this auction compared to last year. This is driven by what we expect will be a highly subscribed process and, as it relates to the fixed price modality, the strong appetite for revenue certainty in the current market price environment
  • The modality for solar plus storage is unlikely to be able to compete with the other remuneration options due to:
    • high CAPEX costs for storage systems
    • low benefits for reducing solar price cannibalisation in the short term as solar capacities remain low
    • high competitiveness to capture price spreads due to the existing fleet of pumped hydro
  • Under our Central forecast, deployment of subsidised renewables is expected alongside merchant/quasi merchant projects depending on the risk-return preference of developers. As such, we do not envisage the outcomes of the auction to affect our previous capacity and price projections

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