Energy Spain Newsflash October
04 October 2022
On 21 September, Royal Decree-Law 17/2022, was published in the Official State Gazette (BOE), introducing urgent measures in the field of energy, in the remuneration scheme for cogeneration facilities and a temporarily reduction in the rate of Value Added Tax applicable to deliveries, imports and intra-Community acquisitions of certain fuels (RDL 17/2022). RDL 17/2022 is comprised within a framework of regulatory measures approved in the recent months due to the disruptions suffered by the gas market.
The main features of RDL 17/2022 are described below:
WAIVER BY COGENERATION PLANTS OF THE SPECIFIC REMUNERATION SYSTEM SO AS TO APPLY THE MECHANISM ESTABLISHED BY THE ROYAL DECREE-LAW 10/2022, OF 13 MAY
A new type of voluntary waiver of the specific remuneration regime is introduced for cogeneration facilities as well as for pig slurry (purines) or olive oil sludge (orujillo) treatment facilities in order for them to apply for their inclusion in the adjustment mechanism established in Royal Decree-Law 10/2022, of 13 May, provided that this adjustment mechanism (RDL 10/2022) - also known as the gas price cap – while it is in force. For further information on RDL 10/2022, please consult the following link.
In particular, the following energy production facilities located in mainland Spain will be eligible:
(a) Group a.1 as defined in article 2 of Royal Decree 413/2014, of 6 June, which regulates the activity of electricity production from renewable energy sources, cogeneration and waste (RD 413/2014).
(b) Those covered by the first transitory provision of RD 413/2014 that had been included in the second transitory provision of Royal Decree 661/2007, of 25 May, which regulates the activity of electricity production under the special regime.
The prior waiver of the specific remuneration scheme will be formalised through a notification to the National Commission on Markets and Competition (CNMC) and will take effect on the first day of the month following such notification. After this notification has been made, an application may be submitted to be included in the adjustment mechanism regulated in RDL 10/2022. This new mechanism will not be applicable until the first day of the month following the date on which the application is submitted to the market and the system operators.
During the period in which the waiver applies:
(a) It will be considered that the facility does not benefit from any of the remuneration schemes regulated under article 14 of Electricity Sector Act.
(b) Compliance with the energy efficiency conditions and fuel consumption limits established in RD 413/2014 will not be required.
(c) The minimum number of equivalent operating hours and the operating threshold of the relevant standard-facility (instalación tipo) will be calculated proportionally to the period in which the mechanism regulated in RDL 10/2022 has not been in force.
Once the period in which the waiver is applicable has ended, the facility will regain the right to receive the specific remuneration regime with effect from the first day of the month following the end of that period.
Likewise, the incorporation to this regime can be withdrawn for those facilities that apply for it, and therefore:
(a) Facilities may request the market operator not to apply the mechanism regulated in RDL 10/2022. The market operator will have a period of 2 working days from the submission of said request to stop the application of the mechanism.
(b) Facilities may apply to the CNMC for early termination of the requested waiver period.
(c) Where the application is submitted at least two businesss days before the end of the month, the effective date for implementation in the specific remuneration scheme will be the first day of the month following the date of the application. Otherwise, the effective date will be deferred by one month.
ACTIONS TO PROMOTE THE PROCUREMENT, DEPLOYMENT AND EVACUATION OF RENEWABLE GENERATION
Additionally, RDL 17/2022 introduces a series of regulatory amendments intended to expedite the administrative processing of renewable energy generation projects:
(a) In those projects that have already obtained prior administrative authorisation, the maximum increase in the installed capacity compared to the original project is raised to 15%. If such threshold is exceeded, a new prior administrative authorisation shall be required. Otherwise, when the increase of the installed capacity does not exceed 15%, it will be sufficient to obtain the corresponding construction authorisation.
(b) The maximum limit for modifications related to the basic technical features of the project is increased to 10% so that such modifications are considered non-substantial and only require the relevant operational authorisation to be obtained instead of the granting of a new construction authorisation.
(c) RDL 17/2022 also modifies the regulations regarding the mandatory report to be issued by the CNMC within the administrative processing procedure of new renewable facilities. Namely, the CNMC will not have to undertake a detailed analysis and will issue a positive report when:
- the project is owned by a developer who has obtained a successful report from the CNMC within the previous 2 years regarding a project of the same technology and whose capacity exceeded 50 % of the capacity of the new project;
- the power of its previous projects has not been increased by more than 300 % and;
- its legal capacity has not been modified.
(d) Finally, RD 413/2014 is amended to provide flexibility for possible discrepancies in the access capacity and in the installed capacity that may arise in the documentation attached to the application for previous registration (inscripción previa) in the administrative registry of electricity production facilities. The permitted discrepancy threshold is set at a maximum of 5% and, in any case, such discrepancies must be addressed before the obtention of the definitive operational notification.
TAX CORNER
RDL 17/2022 establishes, effective from 1 October 2022 until 31 December 2022, the application of a 5% rate for Value Added Tax (VAT): (i) applicable to deliveries, imports and intra-Community acquisitions of briquettes and pellets from biomass and wood for firewood; and (ii) applicable to deliveries, imports and intra-Community acquisitions of natural gas.
