The bidding of PPAs (Power Purchase Agreements) is a mechanism used in Spain for contracting renewable energy over the long term. PPAs are agreements between renewable energy producers and energy buyers, where a fixed price for the generated energy is established for a set period.

In PPA bidding, energy buyers, who are usually large consumers like companies or public institutions, compete to contract the energy generated by renewable plants participating in the auction. The auction is conducted through a descending bidding system, where bidders reduce the price at which they are willing to buy the energy until an agreement is reached.

Although it may seem odd that in PPA auctions, buyers compete to contract renewable energy at the lowest possible price, prices usually do not fall below the cost of producing renewable energy. Energy producers would not be willing to sell their energy at a price that does not allow them to profit and finance their projects. Moreover, the price established in the PPA covers not only the cost of producing energy but also other expenses associated with renewable energy generation, such as investment in infrastructure, plant maintenance, and managing the permits and authorizations necessary for operation. Therefore, although the prices can be competitive, energy producers ensure that the price fixed in the PPA covers costs and allows them a suitable return for their projects.

PPA bidding encourages investment in renewable energies and ensures a stable price for the generated energy, which in turn allows energy producers to obtain long-term financing for their projects.

In Spain, Iberdrola, Endesa, Acciona, Grenergy, Greenalia, Qualitas Energy, Statkraft, Alcoa, Amazon, and El Corte Inglés, among other groups, are leading in gigantic long-term electricity supply contracts. Of the total megawatts in PPAs signed in Europe last year, almost half were signed in Spain, making it a unique case in the EU. And it's not just about the number of companies but also the volume of contracts. The race, which started some time ago, has now accelerated to the maximum, as large electricity consumers have seen PPAs as a way to protect themselves from the price volatility currently affecting electricity due to Russia's war against Ukraine. Spain began to stand out in the world of PPAs four years ago, but now its dominance is absolute, with records being broken month by month.

In addition to protecting against price volatility, another common denominator of PPAs is the appeal of renewables as a pillar for companies' decarbonization. The transition to a low-carbon economy is one of the greatest global challenges of our time. Companies are increasingly aware of the need to reduce their greenhouse gas emissions to address the climate crisis and meet the goals set in the Paris Agreement. PPAs have become a popular tool for companies to reduce their carbon footprint and demonstrate their commitment to sustainability. By investing in renewable energies, companies can significantly reduce their greenhouse gas emissions and meet their sustainability goals. The appeal of renewables as a pillar for company decarbonization is a way to show their commitment to sustainability and reduce their environmental impact.