Spain is moving ahead with a major push to expand cleaner power generation, approving a new auction framework to support 1.2 GW of hydrogen-ready natural gas and biomass-based cogeneration capacity through regulated revenue mechanisms.
The Ministry for the Ecological Transition announced that two competitive power auctions of 600 MW each will be held in 2026 and 2027, aimed at accelerating investment in high-efficiency cogeneration and strengthening the country’s energy transition strategy, Renwables Now reported.
The programme will allow participation from both newly built and refurbished natural gas facilities, provided they meet strict efficiency requirements. Plants with capacity above 1 MW must demonstrate primary energy savings of at least 10 percent.
Spain is also encouraging fuel switching under the programme, allowing facilities currently operating on fossil fuels to participate if they convert to clean biomass or high-efficiency natural gas technologies.
Under the rules, natural gas projects must limit emissions to no more than 270 grams of carbon dioxide per kilowatt-hour and demonstrate the ability to operate using at least 10 percent renewable hydrogen.
Biomass projects will be required to comply with sustainability standards and emissions reduction requirements.
According to the ministry, the additional 1.2 GW of generation capacity could prevent up to 8.4 million tonnes of carbon dioxide emissions over the regulated operating life of the projects.
The support programme has been approved by the European Commission as state aid worth EUR 3.1 billion.
Spanish government estimates indicate that regulated payments for the scheme could add between EUR 414 million and EUR 582 million annually to electricity system costs, although actual support payments are expected to be lower due to competitive bidding.
To standardise project evaluation, the ministry has established 12 reference plant categories with pre-calculated investment benchmarks.
Developers will be required to submit sealed bids offering discounts against those standard investment values.
Project size will be limited to 100 MW per installation, while projects in Spain’s non-mainland systems will face a lower cap of 15 MW.
To encourage competition, no company will be allowed to secure more than 50 percent of the total capacity offered in each auction.
Winning bids will be selected through a descending marginal pricing process.
Successful natural gas cogeneration projects will receive a regulatory operating life of 12 years, while biomass cogeneration projects will receive support for 20 years.
The framework guarantees successful projects a regulated revenue stream designed to deliver a target return of 7.09 percent during the 2026–2031 regulatory period.
The auctions will be supervised by Spain’s competition regulator, CNMC, and managed by electricity market operator OMIE.
Specific auction dates and additional implementation details are expected to be announced separately ahead of each bidding round.
