Forestalia and the Spanish auction

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Ilaria Valtimora
May 26, 2017
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Forestalia and the Spanish auction

In January, we wrote a Wind Watch on Spain’s wind market, where we wondered who would be brave enough to bid in the country’s recent renewables auction. The Spanish government’s history of changing policy regimes is off-putting for investors.

Now we know and, among the group of winners, it was local firm Forestalia that attracted our curiosity.

Wind energy was the dominant force in Spain's 3GW renewable energy auction, whose winners were announced by the Spanish government on 17 May. Almost all of the winning schemes were onshore wind farms, with support going to just 20MW of projects using other technologies, including solar power.

This auction, the biggest in Europe so far, has been welcomed by some as a sign that the renewables sector in Spain is picking up again, but it has raised concerns too. After the financial crisis and the severe recession that has hit the country since 2007, electricity demand has drastically dropped, meaning that Spain’s 23GW of installed wind capacity has led to oversupply.

The government has primarily held this auction to allow Spain to meet its renewable energy target of 20% of the energy mix by 2020. This has raised questions about whether this new capacity is really needed, or whether it will create further oversupply challenges for the Spanish power system.

And these concerns may have influenced the bidders too. Indeed, when we look at the winning bidders, only Enel Green Energy, which won rights for 540MW, and Siemens Gamesa Renewable Energy (206MW) could be classed as top international players – and they did not dominate this auction.

In contrast, Spanish group Forestalia, which was almost unknown until last year, has secured the rights to build 1.5GW of wind farms through auctions in Spain over the last 18 months. It won 300MW of the capacity in the 500MW tender last January, and a massive 1.2GW in this tender. In total, that is 43% of the support awarded.

Also, as it bid for zero-subsidy projects in both cases, it plans to invest up to €1.5bn for the projects that it was awarded.

Fernando Muñoz, chief executive of Forestalia, told Spanish newspaper El Mundo that advances in technology means subsidies are no longer necessary, and he is confident that the company can gain its returns from power sales alone. We love the optimism, but we are left with one burning question: who are Forestalia?

Well, the history of the company is certainly interesting. Fernando Samper Rivas, president of Forestalia, is a member of the family who owns Grupo Jorge, one of Spain’s largest meat producers. In 2011, he left the family business and founded Forestalia to take advantage of the renewables boom in Spain, mainly biomass.

There are two main reasons why Forestalia is now making an impact in wind. First, the business has started to hire its executives from some of the Spanish giants in the sector, including Acciona, bringing in strategic knowledge and valuable expertise.

Second, to carry out its projects Forestalia has signed high-profile agreements with international partners. Starting in 2016, it secured backing for its 300MW project from Deutsche Bank, Santander and General Electric. GE in particular has given Forestalia a solid base from which to succeed in these auctions: GE won’t just be investing its capital, but will also provide the turbines for - and manage - Forestalia’s 1.5GW of projects. BlackRock has also committed to back Forestalia developments.

The emergence of new players like Forestalia is arguably the result of difficulties in the market over the last five years. Established players have moved to focus on new markets and this has opened up opportunities. The attention of firms such as GE and BlackRock shows that there are still sparks of interest in the Spanish market despite recent problems induced by recession and politicians.

But that is not to say that these issues have disappeared. There is no guarantee that all 3GW of the wind farms in this auction will be built, or that they are even needed other than for the country to hit that 20% target. We also have little clarity on prospects for wind in Spain after 2020. If it leads to new players entering the market, though, then that will always attract our attention.

In January, we wrote a Wind Watch on Spain’s wind market, where we wondered who would be brave enough to bid in the country’s recent renewables auction. The Spanish government’s history of changing policy regimes is off-putting for investors.

Now we know and, among the group of winners, it was local firm Forestalia that attracted our curiosity.

Wind energy was the dominant force in Spain's 3GW renewable energy auction, whose winners were announced by the Spanish government on 17 May. Almost all of the winning schemes were onshore wind farms, with support going to just 20MW of projects using other technologies, including solar power.

This auction, the biggest in Europe so far, has been welcomed by some as a sign that the renewables sector in Spain is picking up again, but it has raised concerns too. After the financial crisis and the severe recession that has hit the country since 2007, electricity demand has drastically dropped, meaning that Spain’s 23GW of installed wind capacity has led to oversupply.

The government has primarily held this auction to allow Spain to meet its renewable energy target of 20% of the energy mix by 2020. This has raised questions about whether this new capacity is really needed, or whether it will create further oversupply challenges for the Spanish power system.

And these concerns may have influenced the bidders too. Indeed, when we look at the winning bidders, only Enel Green Energy, which won rights for 540MW, and Siemens Gamesa Renewable Energy (206MW) could be classed as top international players – and they did not dominate this auction.

In contrast, Spanish group Forestalia, which was almost unknown until last year, has secured the rights to build 1.5GW of wind farms through auctions in Spain over the last 18 months. It won 300MW of the capacity in the 500MW tender last January, and a massive 1.2GW in this tender. In total, that is 43% of the support awarded.

Also, as it bid for zero-subsidy projects in both cases, it plans to invest up to €1.5bn for the projects that it was awarded.

Fernando Muñoz, chief executive of Forestalia, told Spanish newspaper El Mundo that advances in technology means subsidies are no longer necessary, and he is confident that the company can gain its returns from power sales alone. We love the optimism, but we are left with one burning question: who are Forestalia?

Well, the history of the company is certainly interesting. Fernando Samper Rivas, president of Forestalia, is a member of the family who owns Grupo Jorge, one of Spain’s largest meat producers. In 2011, he left the family business and founded Forestalia to take advantage of the renewables boom in Spain, mainly biomass.

There are two main reasons why Forestalia is now making an impact in wind. First, the business has started to hire its executives from some of the Spanish giants in the sector, including Acciona, bringing in strategic knowledge and valuable expertise.

Second, to carry out its projects Forestalia has signed high-profile agreements with international partners. Starting in 2016, it secured backing for its 300MW project from Deutsche Bank, Santander and General Electric. GE in particular has given Forestalia a solid base from which to succeed in these auctions: GE won’t just be investing its capital, but will also provide the turbines for - and manage - Forestalia’s 1.5GW of projects. BlackRock has also committed to back Forestalia developments.

The emergence of new players like Forestalia is arguably the result of difficulties in the market over the last five years. Established players have moved to focus on new markets and this has opened up opportunities. The attention of firms such as GE and BlackRock shows that there are still sparks of interest in the Spanish market despite recent problems induced by recession and politicians.

But that is not to say that these issues have disappeared. There is no guarantee that all 3GW of the wind farms in this auction will be built, or that they are even needed other than for the country to hit that 20% target. We also have little clarity on prospects for wind in Spain after 2020. If it leads to new players entering the market, though, then that will always attract our attention.

In January, we wrote a Wind Watch on Spain’s wind market, where we wondered who would be brave enough to bid in the country’s recent renewables auction. The Spanish government’s history of changing policy regimes is off-putting for investors.

Now we know and, among the group of winners, it was local firm Forestalia that attracted our curiosity.

Wind energy was the dominant force in Spain's 3GW renewable energy auction, whose winners were announced by the Spanish government on 17 May. Almost all of the winning schemes were onshore wind farms, with support going to just 20MW of projects using other technologies, including solar power.

This auction, the biggest in Europe so far, has been welcomed by some as a sign that the renewables sector in Spain is picking up again, but it has raised concerns too. After the financial crisis and the severe recession that has hit the country since 2007, electricity demand has drastically dropped, meaning that Spain’s 23GW of installed wind capacity has led to oversupply.

The government has primarily held this auction to allow Spain to meet its renewable energy target of 20% of the energy mix by 2020. This has raised questions about whether this new capacity is really needed, or whether it will create further oversupply challenges for the Spanish power system.

And these concerns may have influenced the bidders too. Indeed, when we look at the winning bidders, only Enel Green Energy, which won rights for 540MW, and Siemens Gamesa Renewable Energy (206MW) could be classed as top international players – and they did not dominate this auction.

In contrast, Spanish group Forestalia, which was almost unknown until last year, has secured the rights to build 1.5GW of wind farms through auctions in Spain over the last 18 months. It won 300MW of the capacity in the 500MW tender last January, and a massive 1.2GW in this tender. In total, that is 43% of the support awarded.

Also, as it bid for zero-subsidy projects in both cases, it plans to invest up to €1.5bn for the projects that it was awarded.

Fernando Muñoz, chief executive of Forestalia, told Spanish newspaper El Mundo that advances in technology means subsidies are no longer necessary, and he is confident that the company can gain its returns from power sales alone. We love the optimism, but we are left with one burning question: who are Forestalia?

Well, the history of the company is certainly interesting. Fernando Samper Rivas, president of Forestalia, is a member of the family who owns Grupo Jorge, one of Spain’s largest meat producers. In 2011, he left the family business and founded Forestalia to take advantage of the renewables boom in Spain, mainly biomass.

There are two main reasons why Forestalia is now making an impact in wind. First, the business has started to hire its executives from some of the Spanish giants in the sector, including Acciona, bringing in strategic knowledge and valuable expertise.

Second, to carry out its projects Forestalia has signed high-profile agreements with international partners. Starting in 2016, it secured backing for its 300MW project from Deutsche Bank, Santander and General Electric. GE in particular has given Forestalia a solid base from which to succeed in these auctions: GE won’t just be investing its capital, but will also provide the turbines for - and manage - Forestalia’s 1.5GW of projects. BlackRock has also committed to back Forestalia developments.

The emergence of new players like Forestalia is arguably the result of difficulties in the market over the last five years. Established players have moved to focus on new markets and this has opened up opportunities. The attention of firms such as GE and BlackRock shows that there are still sparks of interest in the Spanish market despite recent problems induced by recession and politicians.

But that is not to say that these issues have disappeared. There is no guarantee that all 3GW of the wind farms in this auction will be built, or that they are even needed other than for the country to hit that 20% target. We also have little clarity on prospects for wind in Spain after 2020. If it leads to new players entering the market, though, then that will always attract our attention.

In January, we wrote a Wind Watch on Spain’s wind market, where we wondered who would be brave enough to bid in the country’s recent renewables auction. The Spanish government’s history of changing policy regimes is off-putting for investors.

Now we know and, among the group of winners, it was local firm Forestalia that attracted our curiosity.

Wind energy was the dominant force in Spain's 3GW renewable energy auction, whose winners were announced by the Spanish government on 17 May. Almost all of the winning schemes were onshore wind farms, with support going to just 20MW of projects using other technologies, including solar power.

This auction, the biggest in Europe so far, has been welcomed by some as a sign that the renewables sector in Spain is picking up again, but it has raised concerns too. After the financial crisis and the severe recession that has hit the country since 2007, electricity demand has drastically dropped, meaning that Spain’s 23GW of installed wind capacity has led to oversupply.

The government has primarily held this auction to allow Spain to meet its renewable energy target of 20% of the energy mix by 2020. This has raised questions about whether this new capacity is really needed, or whether it will create further oversupply challenges for the Spanish power system.

And these concerns may have influenced the bidders too. Indeed, when we look at the winning bidders, only Enel Green Energy, which won rights for 540MW, and Siemens Gamesa Renewable Energy (206MW) could be classed as top international players – and they did not dominate this auction.

In contrast, Spanish group Forestalia, which was almost unknown until last year, has secured the rights to build 1.5GW of wind farms through auctions in Spain over the last 18 months. It won 300MW of the capacity in the 500MW tender last January, and a massive 1.2GW in this tender. In total, that is 43% of the support awarded.

Also, as it bid for zero-subsidy projects in both cases, it plans to invest up to €1.5bn for the projects that it was awarded.

Fernando Muñoz, chief executive of Forestalia, told Spanish newspaper El Mundo that advances in technology means subsidies are no longer necessary, and he is confident that the company can gain its returns from power sales alone. We love the optimism, but we are left with one burning question: who are Forestalia?

Well, the history of the company is certainly interesting. Fernando Samper Rivas, president of Forestalia, is a member of the family who owns Grupo Jorge, one of Spain’s largest meat producers. In 2011, he left the family business and founded Forestalia to take advantage of the renewables boom in Spain, mainly biomass.

There are two main reasons why Forestalia is now making an impact in wind. First, the business has started to hire its executives from some of the Spanish giants in the sector, including Acciona, bringing in strategic knowledge and valuable expertise.

Second, to carry out its projects Forestalia has signed high-profile agreements with international partners. Starting in 2016, it secured backing for its 300MW project from Deutsche Bank, Santander and General Electric. GE in particular has given Forestalia a solid base from which to succeed in these auctions: GE won’t just be investing its capital, but will also provide the turbines for - and manage - Forestalia’s 1.5GW of projects. BlackRock has also committed to back Forestalia developments.

The emergence of new players like Forestalia is arguably the result of difficulties in the market over the last five years. Established players have moved to focus on new markets and this has opened up opportunities. The attention of firms such as GE and BlackRock shows that there are still sparks of interest in the Spanish market despite recent problems induced by recession and politicians.

But that is not to say that these issues have disappeared. There is no guarantee that all 3GW of the wind farms in this auction will be built, or that they are even needed other than for the country to hit that 20% target. We also have little clarity on prospects for wind in Spain after 2020. If it leads to new players entering the market, though, then that will always attract our attention.

In January, we wrote a Wind Watch on Spain’s wind market, where we wondered who would be brave enough to bid in the country’s recent renewables auction. The Spanish government’s history of changing policy regimes is off-putting for investors.

Now we know and, among the group of winners, it was local firm Forestalia that attracted our curiosity.

Wind energy was the dominant force in Spain's 3GW renewable energy auction, whose winners were announced by the Spanish government on 17 May. Almost all of the winning schemes were onshore wind farms, with support going to just 20MW of projects using other technologies, including solar power.

This auction, the biggest in Europe so far, has been welcomed by some as a sign that the renewables sector in Spain is picking up again, but it has raised concerns too. After the financial crisis and the severe recession that has hit the country since 2007, electricity demand has drastically dropped, meaning that Spain’s 23GW of installed wind capacity has led to oversupply.

The government has primarily held this auction to allow Spain to meet its renewable energy target of 20% of the energy mix by 2020. This has raised questions about whether this new capacity is really needed, or whether it will create further oversupply challenges for the Spanish power system.

And these concerns may have influenced the bidders too. Indeed, when we look at the winning bidders, only Enel Green Energy, which won rights for 540MW, and Siemens Gamesa Renewable Energy (206MW) could be classed as top international players – and they did not dominate this auction.

In contrast, Spanish group Forestalia, which was almost unknown until last year, has secured the rights to build 1.5GW of wind farms through auctions in Spain over the last 18 months. It won 300MW of the capacity in the 500MW tender last January, and a massive 1.2GW in this tender. In total, that is 43% of the support awarded.

Also, as it bid for zero-subsidy projects in both cases, it plans to invest up to €1.5bn for the projects that it was awarded.

Fernando Muñoz, chief executive of Forestalia, told Spanish newspaper El Mundo that advances in technology means subsidies are no longer necessary, and he is confident that the company can gain its returns from power sales alone. We love the optimism, but we are left with one burning question: who are Forestalia?

Well, the history of the company is certainly interesting. Fernando Samper Rivas, president of Forestalia, is a member of the family who owns Grupo Jorge, one of Spain’s largest meat producers. In 2011, he left the family business and founded Forestalia to take advantage of the renewables boom in Spain, mainly biomass.

There are two main reasons why Forestalia is now making an impact in wind. First, the business has started to hire its executives from some of the Spanish giants in the sector, including Acciona, bringing in strategic knowledge and valuable expertise.

Second, to carry out its projects Forestalia has signed high-profile agreements with international partners. Starting in 2016, it secured backing for its 300MW project from Deutsche Bank, Santander and General Electric. GE in particular has given Forestalia a solid base from which to succeed in these auctions: GE won’t just be investing its capital, but will also provide the turbines for - and manage - Forestalia’s 1.5GW of projects. BlackRock has also committed to back Forestalia developments.

The emergence of new players like Forestalia is arguably the result of difficulties in the market over the last five years. Established players have moved to focus on new markets and this has opened up opportunities. The attention of firms such as GE and BlackRock shows that there are still sparks of interest in the Spanish market despite recent problems induced by recession and politicians.

But that is not to say that these issues have disappeared. There is no guarantee that all 3GW of the wind farms in this auction will be built, or that they are even needed other than for the country to hit that 20% target. We also have little clarity on prospects for wind in Spain after 2020. If it leads to new players entering the market, though, then that will always attract our attention.

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Full archive access is available to members only

Not a member yet?

Become a member of the 6,500-strong A Word About Wind community today, and gain access to our premium content, exclusive lead generation and investment opportunities.