A seguro de caución is the instrument article 68 of the Ley de Contrato de Seguro describes: an insurer undertakes to indemnify a named beneficiary if the policyholder fails to meet a legal or contractual obligation, and recovers from the policyholder what it pays. We have explained the instrument in general elsewhere on this site. This piece is about one sector, because energy is where the sequence of obligations a single company has to secure is longest — and where a guarantee bought from the bank, stage by stage, does the most damage to the credit line the project needs.
The first guarantee secures the grid. Real Decreto 1183/2020 requires anyone applying for an access and connection permit to lodge a financial guarantee with the competent administration — the Caja General de Depósitos for the transmission grid and most large plants, the regional treasury for the rest — before the application is admitted, calculated as a fixed sum per kilowatt of the capacity requested. It is held until the plant obtains its autorización de explotación, and it is forfeited if the project withdraws or misses the administrative milestones that Real Decreto-ley 23/2020 attaches to the permit — the authorisations, the start of construction and the commissioning each have a date. The regulation admits a seguro de caución as a form of that guarantee. What the administration checks before accepting one is that the insurer is entered on the DGSFP register for ramo 15, caución, and active; that the certificate follows the prescribed model; and that it is payable on first demand.
The second is to the administration that authorises the plant. The autorización administrativa previa and the autorización de construcción under Ley 24/2013 del Sector Eléctrico, and the environmental declaration that precedes them, commonly carry a fianza for restoring the land and for the conditions imposed on the works. A developer bidding into the auctions for the renewable energy economic regime under Real Decreto 960/2020 posts a guarantee to take part, which is kept after the award until the plant is delivered and forfeited if it is not delivered by the date it bid. These are public-sector beneficiaries, and the seguro de caución is admitted for all of them on the same condition as the first: an insurer authorised in the ramo.
The third is the construction itself, and the beneficiary is private. The project company that owns the plant contracts an EPC contractor, and the contract asks for a performance guarantee — typically a percentage of the price — an advance payment guarantee for the sum paid up front on turbines, modules or transformers, and a warranty guarantee for the defects period after commissioning. The EPC contractor asks its suppliers for the same, one tier down. Nothing here is in a prescribed model: the wording is the contract’s, usually on first demand, and it is negotiated — which is why the applicant should send the draft to the underwriter before signing the contract rather than after, when the guarantee required is already fixed.
The fourth is to the party that buys the power. A corporate offtaker under a long-term power purchase agreement asks the generator for security on its obligation to deliver, and sometimes on the damages the agreement fixes if it does not. That is a caución. The generator, for its part, is exposed to the offtaker paying late or not at all, and the cover for that is not a caución but credit insurance — ramo 14, crédito — on the receivable, with a limit set on the offtaker. The same insurer can write both; they are two different contracts, and a company that needs both buys two policies.
The fifth is the longest-dated instrument of all. The autonomous community that authorised the plant requires a guarantee for its dismantling and the restoration of the site at the end of its life, as a condition of the authorisation, and it is held for as long as the plant stands. An aval that runs for decades is an exposure a bank reprices every year; a caución with the same term is written once, with a review built in, which is one of the places where the two instruments stop resembling each other.
Why a facility, then, rather than five instruments. Surety is granted in aggregate against a balance sheet, so an underwriter looking at the fifth guarantee is really looking at the total of the other four, and a developer that has secured each stage with a different bank has told nobody what the whole pipeline looks like. A facility sized for the pipeline is one set of accounts, one counter-indemnity from the entity that holds the assets, one wording library for the beneficiaries that recur — the Caja, the regional treasuries, the EPC contractors the sponsor works with — and then each certificate is a call. It also makes releases visible: a facility is measured by what is outstanding on it, and a grid guarantee returned at authorisation, an advance payment guarantee reduced as the advance is recovered or a warranty guarantee cancelled at the end of the defects period is capacity the next project draws on.
What the underwriter needs is what the project itself needs in order to exist: the sponsor’s last audited accounts and current management figures, the permits held and the milestone calendar for each, the EPC and supply contracts with their guarantee clauses, the offtake arrangement, and the group structure behind the project companies. What the beneficiary checks is shorter: the register entry — clave L1617, ramo 15, on the DGSFP’s administrative register, with prudential supervision remaining in Ireland — and the form of the certificate. Both are on this site, and the register is a search anyone can run.
Written by the underwriting team at FDI Insurance d.a.c., Dublin. This piece is general information, not advice on any particular transaction — and it is not an offer of insurance.
