Energy Spain Newsflash
Royal Decree-Law 8/2023, of 27 December, on measures to address the economic and social consequences of the conflicts in Ukraine and the Middle East and to mitigate the effects of the drought
On 28 December 2022, Royal Decree-Law 8/2023, of 27 December, on measures to address the economic and social consequences of the conflicts in Ukraine and the Middle East, as well as to mitigate the effects of the drought (RDL 8/2023) was published in the Official State Gazette (BOE). Among these measures, Title III of the aforementioned Royal Decree-Law includes a series of measures concerning the energy sector which are briefly summarised in the present newsflash.
Exceptional extension to the administrative milestones foreseen in Royal Decree-Law 23/2020 (RDL 23/2020)
Generation facilities that have obtained the relevant access and connection permits after 31 December 2017, and prior to the entry into force of RDL 8/2023: (i) will have a maximum period of 49 months to obtain the administrative construction authorisation; and (ii) may request -once they have obtained the administrative construction authorisation- an extension of the deadline to comply with the milestone related to obtaining the final exploitation authorisation, provided that the total period for obtaining the administrative exploitation authorisation does not exceed 8 years.
In order to obtain the extension of the deadline for the granting of the final exploitation authorisation, the developer must submit an application to the competent authority that granted the administrative construction authorisation within the following 3 months. Such application shall include (i) the calendar semester in which the facility will obtain the exploitation authorisation and (ii) the commitment to expressly accept the impossibility of obtaining the exploitation authorisation or the registration in the administrative register of electricity production facilities prior to the start of said semester. This application shall be resolved within 6 months and such resolution shall specify the deadline by which the operating authorisation shall be obtained.
Notwithstanding the above, access and connection permits shall not expire and the abovementioned deadline shall not be deemed to have been exceeded in those scenarios in which the transmission and distribution system operators have not obtained the final operating authorisation for the positions of the relevant substation; but, it is evidenced that the provisional operating authorisation for tests -provided that this authorisation includes both, the generator plant and the evacuation infrastructures, up to at least the last 100 metres to the grid connection point– has been obtained.
Finally, developers of pumped-storage hydro and offshore wind technologies, will be entitled to request an extension of the deadlines for the fulfilment of the milestones set out in RDL 23/2020 provided that they will be subject to a maximum deadline of 9 years from obtaining the access and connection permits for obtaining their final operating authorisation. This potential extension is justified as these technologies require much longer processing and construction periods than other renewable technologies.
Release of access capacity for self-consumption at the nodes subject to access capacity tenders
10% of the capacity reserved for access capacity tenders will be released (either at the entry into force of RDL 8/2023 or in the future), for a period of 2 years, and may be granted pursuant to the temporary criteria set out in RDL 23/2020 as long as the facilities requesting such capacity: (i) have elected a self-consumption modality and (ii) the ratio between the contracted capacity in period P1 (peak period) and the installed generation capacity is at least 0.5.
The above shall not apply to those nodes where access capacity has already been released pursuant to Royal Decree-Law 6/2022, of 29 March adopting urgent measures within the framework of the National Response Plan to the economic and social consequences of the war in Ukraine (RDL 6/2022).
Regulation of access and connection permits for electricity demand facilities
Royal Decree 1183/2020, of 29 December, on access and connection to electricity transmission and distribution grids (RD 1183/2020) is amended with the aim of introducing a new regulation of the access and connection permits for electricity demand facilities, in order to prevent speculative monopolisation of such access permits by projects which do not have yet a clear development viability:
(a) Demand access permits for self-consumption will be limited to 50% of the capacity of the generation facility in those scenarios where the generation facility is connected to a connection point in the transmission grid where generation access permits have been previously granted. This percentage may be amended by a resolution of the Secretary of State for Energy (Secretaría de Estado de Energía) once the Circular of the National Commission for Markets and Competition (Comisión Nacional de los Mercados y la Competencia, CNMC) establishing the requirements for assessing the access capacity of demand facilities and their detailed technical specifications, has been approved.
(b) The regulation of the access capacity tenders for generation facilities is modified in relation to (i) the conditions set out in article 18.2 of RD 1183/2020 for the holding of access capacity tenders and (ii) the possibility of awarding additional points to those projects which, despite not having access and connection permits yet, have been granted with a favourable environmental impact statement.
(c) The holding of demand capacity tenders in certain transmission grid nodes with a voltage equal to or greater than 220 kV under certain circumstances shall be possible. The asset to be awarded through these tenders shall be the access capacity for consumption, expressed in MW, and the tenders shall cover the total available capacity of the relevant node.
(d) Furthermore, RDL 8/2023 sets out the obligation to provide grid guarantees equivalent to € 40/kW for demand access capacity applications submitted from 28 December 2023 (except in case of (i) storage, whose amount will be € 20/kW, and (ii) for installations whose connection is requested at voltage points below 36 kV, which will be exempt from providing these grid guarantees). The purpose of these guarantees will be the supply of a specific consumption and they will be cancelled when the applicant formalises the access agreement for a contracted capacity in the P1 period of at least 50 % of the access capacity granted. The third transitional provision extends the obligation to provide a guarantee to holders of access and connection permits granted prior to the entry into force of RDL 8/2023 whose connection point is at a voltage equal to or greater than 36 kV and who have not formalised the aforementioned access agreement. Failure to file with the grid system operator the receipt certifying that the guarantee has been properly deposited within the specified deadlines will result in the automatic expiry of the access permits or, where appropriate, of the access and connection permits.
Extension of certain support measures to address the economic and social consequences of the war in Ukraine
(a) The support mechanism to guarantee the competitiveness of the electro-intensive industry set out in RDL 6/2022 -consisting of an 80 % bill reduction for the cost of access tolls to the electricity transmission and distribution grids- is extended until 30 June 2024.
(b) The temporary flexibility scheme for electricity supply agreements set out in Royal Decree-Law 18/2022, of 18 October, as well as the temporary flexibility mechanism for natural gas supply agreements set out in the third additional provision of RDL 6/2022 -whose provisions are modified to adjust it to this extension- are extended until 30 June 2024.
(c) The temporary scope of the limitation on the maximum sale price of bottled liquefied petroleum gases is increased by virtue of the modification of article 19 of Royal Decree-Law 11/2022, of 25 June. The maximum sale price in the reviews corresponding to January and March 2024 shall not exceed the price set out in the Resolution of 12 May 2022 of the Directorate-General for Energy Policy and Mines (Dirección General de Política Energética y Minas), publishing the new maximum sale prices, before taxes, of bottled liquefied petroleum gases, in charges equal to or greater than 8 kg and less than 20 kg, excluding mixed containers for the use of liquefied petroleum gases as fuel. The imbalances generated shall be recovered in subsequent revisions of this maximum price.
Additional energy measures
(a) An extraordinary contribution is approved in the first provisional settlement corresponding to the year 2024, derived from the last provisional monthly settlement made on account of the closing of the year 2023, equivalent to the surplus income of the electricity system regarding charges corresponding to the year 2022, once the amount nominated for year 2023 has been deducted. Accordingly, the General State Budget Act (Ley de Presupuestos Generales del Estado) to be approved after the entry into force of RDL 8/2023, shall allocate a credit to finance the costs borne by the electricity system charges. Likewise, a percentage of the surplus of the year 2023 regarding charges may be allocated to the charges corresponding to year 2024, once the closing settlement of 2023 has taken place.
(b) The electricity system charges as well as the capacity payments for the year 2023 set out in Order TED/1312/2022 will be also applicable to year 2024 until the corresponding charges for that year are approved.
(c) The deadline for such generation facilities that have obtained a limited operational notification (LON) to provide the necessary documentation to obtain the corresponding final operational notification (FON) is extended by 8 months (i.e. until 2 October 2024). However, the maximum deadline for issuing limited operational notifications referred to in Article 2 of Order TED/724/2022, of 27 July (i.e. 2 February 2024) is not amended, so that they may not be issued after that date. Likewise, type A modules that are already registered under a LON will be exempt from obtaining the relevant FON.
(d) The Council of Ministers is empowered to modify the list of fair transition nodes included in RDL 23/2020, provided that it includes nodes where thermal or nuclear power plants that have closed or are due to close in the short term are evacuated, as well as those nodes located in their area of electrical influence for the purposes of granting access permits. La Pereda 220 kV node is also included in this list.
(e) The update of the remuneration for operation within the specific remuneration regime corresponding to the first half of 2024 for cogeneration and waste treatment facilities type installations (instalaciones tipo) shall be calculated in such a manner that, added to the forecasted operating income, it shall be equal to the estimated operating costs, being these values applicable until 30 June 2024. Likewise, in relation to the update of the aforementioned remuneration for the first half of 2024, (i) the calculation hypotheses and parameter values for application to the regulatory half-period (semi-periodo regulatorio) commencing on 1 January 2023 will apply, (ii) without prejudice to the exceptions to said hypotheses and parameter values set out in RDL 8/2023, which must be considered in that update.
(f) The CNMC will adjust the remuneration from the specific remuneration regime in the first settlement following the implementation of RDL 8/2023 (provided that it has the necessary information), to deduct the amounts not paid by the facilities due to the suspension of the tax on the value of electricity production established in RDL 8/2023.
(g) Certain articles of Law 34/1998, on the Hydrocarbons Sector (LHS), are amended to face certain fraudulent practices that have recently been detected in the liquid hydrocarbons sector due to the systematic failure to comply with obligations relating to the Corporation of Strategic Reserves of Petroleum Products (Corporación de Reservas Estratégicas de Productos Petrolíferos, CORES), the Information System for Biofuels Certification (Sistema de Información para la Certificación de los Biocarburantes, SICBIOS) or the National Energy Efficiency Fund (Fondo Nacional de Eficiencia Energética, FNEE), as well as in relation to tax matters.
(h) Pursuant to article 63 bis of the LHS, the natural gas transmission system operators may (i) submit to the Directorate General for Energy Policy and Mines (Dirección General de Política Energética y Minas), within 4 months as of the entry into force of RDL 8/2023, a non-binding proposal for the development of the hydrogen basic infrastructure, with a 10-year horizon, and (ii) act as representatives in the European Network of Network Operators for Hydrogen.
Finally, Law 24/2013 on the Electricity Sector is amended to allow -in line with European recommendations- the incorporation of non-economic awarding criteria for the renewable energy economic regime in order to consider other relevant aspects of renewable energy development such as environmental sustainability, innovation, etc.
The Spanish Congress in a session held 10 January 2024 ratified RDL 8/2023 as an extraordinary measure and resolved to process it as bill through the urgent procedure.
The content of the Royal Decree-Law can be accessed here.
Other recent energy measures
Recently, the Ministry for Ecological Transition and the Demographic Challenge (Ministerio para la Transición Ecológica y el Reto Demográfico, MITERD) has opened the hearing and public information period in relation to the following proposals:
(a) Draft Order on the prices of electricity system charges for the year 2024, prices applicable to public access electric vehicle charging points, unit prices applicable to capacity payments for the year 2024, the annual instalments of the revenue mismatch for the year 2024, the provisional remuneration of OMI-Polo Español, S.A., and the amount of the overproduction in non-peninsular territories.
The hearing and public information procedure will be open until 15 January 2024 and can be accessed here.
(b) Draft Order on the contribution obligations to the FNEE for the year 2024. The draft Order defines the savings target for 2024, the savings obligations by each entity, the financial equivalence for the contributions to the FNEE and updates the remuneration item of the annual contribution cost to the FNEE. All of the above pursuant to Law 18/2014, of 15 October, approving urgent measures for growth, competitiveness and efficiency.
The hearing and public information procedure will be open until 31 January 2024 and can be accessed here.
Regulation (EU) 2024/223 of the Council dated December 22, 2023, amending Regulation (EU) 2022/2577 establishing a framework to accelerate the deployment of renewable energies
Regulation (EU) 2022/2577 of December 22, 2022 (Acceleration Regulation) introduced measures with a temporary validity of 18 months (i.e., until 30 June 2024) to expedite the authorisation process for certain renewable energy projects. The analysis of these measures can be accessed here.
The recently approved Regulation (EU) modifies, among others, the following provisions of the Acceleration Regulation:
(a) The extension of the obligation of the Member States to ensure, in projects deemed of superior public interest, that when weighing legal interests, priority is given to the construction and operation of power plants and facilities for the production of energy from renewable sources, as well as the development of related network infrastructure.
(b) The introduction of a new article 3 bis in the Acceleration Regulation, which facilitates two aspects of the environmental processing of projects for the installation of energy production or renewable energy infrastructure integration: (i) specifying that the requirement to assess the existence of satisfactory alternative solutions – as provided for in various environmental regulations – will be considered fulfilled when there are no satisfactory alternative solutions capable of achieving the same objective as the project in question; (ii) introducing the possibility for Member States to allow the environmental compensatory measures required by these projects to be carried out concurrently with the project's execution unless there is clear evidence that a specific project would irreversibly affect the essential ecological processes for maintaining the structure and functions of the site and endanger the overall coherence of the Natura 2000 network before the compensatory measures are implemented.
(c) Regarding the processing of repowering projects: (i) authorisation granting process, including those involving improvements to the assets necessary for their connection to the grid when repowering results in a capacity increase, shall not exceed six months, including the procedures for environmental impact assessments; (ii) time periods, such as those when facilities are undergoing construction or repowering, establishing connections to the grid, or engaging in administrative procedures required for significant grid improvements, are specifically excluded from the aforementioned timeframe.
(d) The temporal validity of some measures of the Acceleration Regulation is extended by one year. This includes the possibility for Member States to exempt certain environmental assessment obligations for renewable energy projects, as well as energy storage projects and electricity network projects necessary to integrate renewable energy into the electrical system, in accordance with the conditions established in Article 6 of said Regulation.
These measures will take effect on 1 July 2024, except for the environmental processing measures outlined in the aforementioned new article 3 bis, introduced into the text of the Acceleration Regulation by this amendment, which will take effect on 11 January 2024.
The content of the Regulation (EU) 2024/223 of the Council dated December 22, 2023 can be accessed here.
The CNMC approves the resolutions of the main and dominant operators in the energy sector
On 2 January 2024, the CNMC published its Resolutions of 15 December 2023, establishing the main and dominant operators in the energy sector for the year 2024.
The content of the Resolutions can be accessed here (main operators and dominant operators).
The CNMC approves the resolution that establishes the prices of electricity transmission and distribution tolls for 2024
On 25 December 2023, the Resolution of 21 December 2023 of the CNMC was published, establishing the values of the access tolls to the electricity transmission and distribution grid applicable as from 1 January 2024.
For the calculation of the aforementioned values, the estimated transmission and distribution activities' remuneration arising from the application of Circular 5/2019 and Circular 6/2019 has been considered.
In 2024, transmission remuneration is 10.3 % lower than in 2023 and distribution remuneration increases by 2.8 %. Therefore, tolls are reduced for this new period, by 1.1 % -in average terms- compared to the tolls applied since 1 January 2023.
The content of the Resolution can be accessed here.
The Tax Corner
Tax measures introduced by RDL 8/2023
RDL 8/2023 also introduces a series of new tax-related features, of which the most noteworthy are as follows:
(a) Personal Income Tax (Impuesto sobre la Renta de las Personas Físicas): Temporary extension for an additional year of (i) the deduction for improvement works to reduce the demand for heating and cooling, (ii) the deduction for improvement works to reduce the consumption of non-renewable primary energy and, (iii) the deduction for energy refurbishment works in residential properties. Thus, the deadline for performing the works is extended to 31 December 2024 (except for point (iii) above, for which the deadline is extended to 31 December 2025) and the deadline for implementing each deduction is extended to 31 December 2025.
(b) Corporate Income Tax (Impuesto sobre Sociedades): Temporary extension for one year (including 2024) of the freedom of depreciation established for investments using energy derived from renewable sources (facilities for self-consumption of electricity and facilities for thermal use for own consumption, provided that they use energy derived from renewable sources and replace facilities that use energy derived from non-renewable fossil fuel sources). Likewise, the maximum amount of these investments that can benefit from this allowance is EUR 500,000.
(c) Value Added Tax (Impuesto sobre el Valor Añadido): During the year 2024, the tax rate is increased from 5% (applicable during the year 2023) to 10% on deliveries, imports and intra-community acquisitions: (i) in favour of electricity supply agreement holders whose contracted capacity is less than 10 kW, (ii) in favour of those who are beneficiaries of social bonus (bono social) for electricity, having the recognised condition of severely vulnerable (vulnerable severo) or severely vulnerable at risk of social exclusion (vulnerable severo en riesgo de exclusión social), (iii) of natural gas and, (iv) of briquettes and pellets, although in the latter case, the 10% rate will be applicable until 30 June 2024 and not for the entire year.
(d) Special Tax on Electricity (Impuesto Especial sobre la Electricidad): A progressive increase of the 0.5% tax rate is regulated as follows: (i) 2.5% from 1 January to 31 March 2024 and (ii) 3.8% from 1 April to 30 June 2024.
(e) Tax on the Value of the Production of Electricity (Impuesto sobre el Valor de la Producción de la Energía Eléctrica): The suspension on the payment of this tax applicable since the third quarter of year 2021 is lifted and certain measures are introduced as regards: (i) the way of assessing the taxable base (base imponible) and (ii) the amount of the instalment payments during 2024, leading to an effective tax cost of 3.5% until March 2024; 5.25 % until June 2024; and, subsequently, 7% until the end of the year.
(f) Temporary Energy Charge (Gravamen Temporal Energético): It is extended for the year 2024 and its nature has been revised and now considered as a tax agreed or negotiated with the regional territories (territorios forales). In addition, an incentive for strategic investments that are essential for the ecological transition, such as energy storage, new renewable fuels - such as biogas, biomethane or green hydrogen - and their possible associated network infrastructures, as well as investments associated with the national and European value chain, will be established in the General State Budget Act for the year 2024, which will be carried out from 1 January 2024 in relation to the magnitudes to be considered with respect to the aforementioned year.
