Cogeneration Auctions 2026: 7.09% Return and Key Conditions for Industrial Companies

Key data

Industrial companies with high-efficiency cogeneration have a window of structured economic support thanks to the Order TED/672/2026, published on 4 July 2026 and in force from that same date. This order develops the competitive auction mechanism to allocate the specific remuneration scheme (SRS) under the Royal Decree 530/2026, of 24 June. It is not automatic support: you must participate in an auction, offer competitive conditions and meet demanding technical and sustainability requirements.

What does this regulation establish?

Order TED/672/2026 regulates the allocation procedure for the specific remuneration scheme (SRS) for high-efficiency cogeneration facilities through competitive auctions. The mechanism is based on Royal Decree 530/2026 and has been authorized by the European Commission as state aid under reference SA.114058.

The eligible facilities are as follows:

The auction mechanism works as follows: facilities compete by offering a percentage reduction on the standard initial investment value. The higher the reduction offered, the greater the competitiveness of the bid. The winner obtains the SRS with the reasonable return of 7.09%, extended for the third regulatory period 2026–2031.

Sustainability conditions and emissions limits are binding: no facility exceeding 250 gCO2e/kWh can access the SRS. Additionally, facilities using fossil fuels have the obligation to complete accrual of remuneration before 31 December 2045.

Economic and operational impact

The most direct impact is the possibility of obtaining guaranteed remuneration income during the regulatory useful life of the facility (12 or 20 years depending on technology), calculated on a reasonable return of 7.09%. This makes cogeneration an investment with predictable returns, which facilitates financing of industrial energy efficiency projects.

From an operational perspective, there are two critical conditions that affect strategic planning:

• Emissions limit: facilities must remain below 250 gCO2e/kWh. Exceeding this threshold means losing access to the SRS.
• Fossil fuel time horizon: if the facility uses natural gas (even with renewable hydrogen), accrual must be completed before 31/12/2045. This limits effective economic life and must be incorporated into the business model.
• Hydrogen blend: subgroup a.1.1 requires a minimum of 10% renewable hydrogen in the fuel mix, which means ensuring supply and green hydrogen contracts.
• Auction competition: the bidding variable (reduction of the standard investment value) penalizes those who do not optimize their project costs. An uncompetitive offer can exclude technically valid facilities.

Who does it affect?

• Industrial companies holding high-efficiency cogeneration facilities in operation or in project.
• Plants using natural gas with at least 10% renewable hydrogen (subgroup a.1.1).
• Biomass cogeneration facilities classified in groups b.6 and b.8.
• CFOs and operations directors in sectors with high process heat demand: food, paper, chemicals, ceramics, textiles, pharmaceuticals.
• Energy advisors and consultancies managing distributed generation assets for industrial clients.
• Promoters and investors in industrial energy efficiency projects with a cogeneration component.

Practical example

A food industry company has a natural gas cogeneration facility with 12% renewable hydrogen in the mix (meets the minimum 10% required for subgroup a.1.1). It decides to participate in the auction called under Order TED/672/2026.

In the bid, it offers a reduction of 8% on the standard initial investment value. If awarded, it obtains the SRS with a reasonable return of 7.09% for 12 years of regulatory useful life of subgroup a.1.1. Its emissions are 210 gCO2e/kWh, below the 250 gCO2e/kWh limit, so it meets the sustainability requirement.

When planning the project, the company must take into account that accrual of remuneration must be completed before 31 December 2045, which conditions the commissioning schedule and the effective duration of the remuneration contract. If the facility starts operation in 2027, the 12 years of regulatory useful life would end in 2039, within the 2045 limit.

What should companies do now?

1. Verify technical eligibility: check whether the facility fits into subgroup a.1.1 (natural gas + minimum 10% renewable hydrogen) or biomass groups b.6/b.8. Without this verification, there is no point in continuing.
2. Audit emissions: calculate the current emissions level of the facility and confirm that it is below 250 gCO2e/kWh. If close to the limit, evaluate corrective measures before participating.
3. Model the bid offer: calculate the percentage reduction of the standard investment value that the facility can offer competitively without compromising project viability at the 7.09% return.
4. Plan the time horizon: for facilities using natural gas, verify that SRS accrual can be completed before 31/12/2045. Adjust the commissioning schedule if necessary.
5. Secure renewable hydrogen supply: if opting for subgroup a.1.1, close supply contracts or agreements that guarantee the minimum 10% renewable hydrogen continuously.
6. Consult the state aid file SA.114058: review the specific conditions imposed by the European Commission for this scheme, as they may include additional reporting or compliance obligations.

Official source

Consult complete regulation at official source

Notice: This article is for informational purposes only and does not constitute legal advice. For specific decisions, consult a qualified professional. Source: https://www.boe.es/diario_boe/txt.php?id=BOE-A-2026-14501