The new measures include changes to grid access permits and a new remuneration regime for renewables, among other provisions.
On 23 June, the Spanish Government passed Royal Decree-Law 23/2020, which entered into force on 25 June, approving new measures in the energy sector that aim to promote renewable energy generation and support the recovery of the economy in line with the European Green Deal (the New Regulations).
According to the Spanish Energy Plan, new renewable energy generation facilities with an installed capacity of approximately 60,000 MW will be built this decade, with an estimated investment of more than €90 billion. To achieve such an ambitious estimated capacity target, the New Regulations include specific measures to attract investment and to provide legal certainty to investors. The main provisions may be summarized as follows:
- Access and connection to the transmission and distribution grids
The New Regulations approve specific rules affecting permits to access and connect to the transmission and distribution grid obtained after 27 December 2013. In line with previous provisions intended to limit the validity of such permits over time and to avoid speculation on them, the New Regulations establish specific milestones that sponsors must achieve within a given timeframe during the construction and commissioning of a renewable facility. If such milestones are not met before the relevant deadlines, the access and connection permits will be deemed void and the guarantees given by the sponsor will be enforced. Grid access and connection permits applied for after the New Regulations enter into force will not be issued until subsequent regulations are approved (which the Government will have to adopt before 25 September 2020).
- New specific remuneration regime for renewables
In addition to the previous remuneration regime applicable to renewable facilities established by the Electricity Sector Law, the New Regulations include a new remuneration framework based on the long-term recognition of a fixed price for the sale of electricity produced by renewable facilities. The regulated remuneration will be awarded through competitive tendering processes whereby the product to be auctioned will be the electricity, the installed power capacity, or a combination of both.
- Simplification of administrative procedures
The New Regulations simplify the procedure to obtain certain permits and authorizations for energy generation facilities (including conventional facilities), in particular regarding existing facility modifications and the environmental impact assessment process.
- New agents within the energy system
The New Regulations also approve specific regulation of ancillary electricity activities, such as electricity storage, the activities of independent aggregators (of consumer’s production, generators or storage facilities) and the activities of renewable energy communities.The New Regulations include measures to promote the hybridization of existing facilities with modules that use primary renewable energy sources or energy storage facilities.
- Electrical vehicles and other measures
The New Regulations provide for the deployment of high-capacity charging points for electrical cars in roads and highways, as well as aids to biomass and cogeneration plants (and other generation facilities whose cost depends mainly on the price of fuel), among other measures.
Notwithstanding that these measures were supposed to be included in the Draft Law on Climate Change, the Spanish Government has separately adopted the above measures related to renewable energy.Latham & Watkins will continue to monitor developments in this area.