- On 23 June the government approved a decree-law that aims to revive the economy through the transition to a 100% renewable electricity system.
- Grid access and connection permits will be tied to real projects, with milestones and deadlines which, if missed, will make the permit lapse.
- Storage, hybridisation, the independent aggregator and renewable energy communities are regulated.
On 23 June 2020, the Council of Ministers approved Royal Decree-Law 23/2020, published in the Official State Gazette the next day, with measures on energy and other areas for economic recovery. Its aim is to combine the transition to a renewable electricity system, with 74% renewable electricity in 2030 and 100% before 2050, with a push for investment as the country emerges from the crisis.
The government put at some 60,000 megawatts the renewable capacity that could be installed in the next decade, with investment above 90 billion euros and between 107,000 and 135,000 net jobs a year. To that end, the decree-law changes the rules on grid access, the auction system and business models.
Access and connection permits
According to the government’s explanation, more than 430,000 megawatts had been requested for access to the electricity grid, and around 60% of access permit holders had not requested the connection permit. The decree-law seeks to avoid speculation by tying permits to real, firm projects, with administrative milestones and deadlines. If they are not met, the permit lapses and the guarantees are enforced.
For three months, holders and applicants can withdraw and recover their guarantees. A moratorium on new access applications is also established until new regulation is approved, which the government and the CNMC must draw up within three months. For the serious developer, the change puts the queue in order; for one who was accumulating permits without a project, it means a decision. It is a decision with economic consequences, because it affects guarantees already posted.
Auctions and new models
The new auction regime will take the price of energy as the bidding variable, may differentiate technologies according to their characteristics and will allow renewable energy communities to compete on equal terms. Small installations and innovative pilot projects may be exempt, in line with European rules. The earlier framework, from 2013, was considered obsolete because renewables are already cheaper than the market price.
The decree-law also regulates storage, hybridisation, that is, combining technologies such as solar and wind in one installation, and the figure of the independent aggregator, which pools demand or generation from several participants. It enables special procedures for R&D&I projects and regulatory sandboxes. High-capacity charging points are declared of public utility.
What to review
Developers holding access or connection permits should immediately review the stage each project is at and which milestones and deadlines apply, and decide whether it pays to withdraw during the three-month period to recover guarantees. Also worth analysing are the guarantees posted and the environmental processing timetable.
For a company that consumes energy, the interest lies in supply contracts, the possibility of self-generation and storage, and the medium-term effect on prices. Equipment and service suppliers in the sector will find opportunities in the demand for real projects. Before deciding on an investment, consult your adviser on the effect of these rules and of those to be developed in the coming months. It is also worth following the planned regulatory development, because the details of the auctions and of access will be set in later rules.
When access rules are put in order, the winners are those with real projects and deadlines met.
This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.
