Spain’s energy transition is being built by companies that have to post a guarantee before they build anything. A developer applying for grid access lodges security with the administration before the application is even processed. The same developer posts it again to the body that authorises the plant, again to the EPC contractor and the equipment supplier once construction starts, again to the company that has agreed to buy the power, and once more — for the whole life of the plant — for taking it down at the end. Five guarantees, five beneficiaries, five wordings, and in most of the files we have seen since July, five bank avales, each of them drawn on the credit line that was supposed to fund the construction.
The first of them is the one that sets the pattern. Under Real Decreto 1183/2020 a project cannot apply for a grid access and connection permit without first lodging a financial guarantee, set by the regulation as a fixed sum per kilowatt of the capacity requested, with the Caja General de Depósitos or the regional treasury. It is held until the plant obtains its authorisation to operate, and it is forfeited if the project misses the administrative milestones that Real Decreto-ley 23/2020 laid down to keep the permit alive. The regulation admits a certificado de seguro de caución as a form of that guarantee, beside cash and the aval — the administration holding it is holding a supervised insurer’s undertaking, which is what it needs — and yet the aval remains the default, because it is what the developer’s bank offered first.
Then the sequence runs. The autorización administrativa and the construction authorisation under the Ley del Sector Eléctrico can carry conditions of their own, and an environmental declaration usually adds a fianza for restoring the site. A developer bidding into one of the renewable energy auctions posts a guarantee to take part and keeps it posted to hold the award. On the EPC contract the project company wants a performance guarantee and security for the advance it pays on turbines or modules, and the EPC contractor wants the same from its own suppliers. A corporate offtaker under a power purchase agreement asks for security on the delivery obligation; the generator, for its part, wants cover on what the offtaker owes it. And the autonomous community that authorised the plant requires a guarantee for its dismantling and the restoration of the land, which outlives every other instrument on the list.
What reaches our desk through the agency, then, is rarely a request for one guarantee. It is a developer or an EPC contractor with a pipeline — three solar parks at the permit stage, a wind farm about to start construction, a storage project behind them — asking whether the whole sequence can be secured without consuming the bank facility each stage of it needs. It can, and that is the point of a caución: it is priced as a premium and sits outside the banking relationship, so the line that funds plant, materials and the grid connection works is still there when construction starts. The Caja General de Depósitos accepts it, a contracting authority accepts it under Ley 9/2017, and a private beneficiary accepts it on the wording its contract requires.
The underwriting is the project, not the instrument. We would rather read the pipeline once — the sponsor’s accounts, the permits held and the milestone calendar for each, the EPC counterparties and their track record, the offtake arrangements, and the group structure behind the project companies, so that the counter-indemnity comes from the entity that holds the assets — and set a facility that follows it through. Each certificate then becomes a telephone call rather than a submission, in the shape the beneficiary requires: the prescribed model for the Caja, the pliego’s wording for a public body, the negotiated text for an EPC. And because each guarantee has a release written into it — the authorisation to operate, the acta de recepción, the end of the warranty period, the last instalment of the advance — a release chased on time is the capacity the next project needs.
Two things we say plainly to every applicant. A caución is not a way of obtaining security a bank has refused: the insurer that pays a demand looks to the policyholder under the counter-indemnity, so the credit analysis at the start is real. And it is not cheaper by definition. The premium reflects the strength of the sponsor, the term, the wording and the security behind the counter-indemnity. What it reliably is, is capacity — security the administration and the counterparty accept, from a balance sheet published in full, without spending the line that funds the work.
Spain is distributed and administered through our associated managing general agent, as all our Spanish business is. A broker or a developer with an energy pipeline should write to the broker desk in Dublin and say so; we make the introduction to the agency and the facility is prepared from there. Every certificate is issued on FDI Insurance paper, under our entry on the DGSFP register — clave L1617, ramo 15, caución — and against the capital we publish, filed report by filed report, in the solvency section of this site.
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.
