Promotion of the energy reform in Spain: the Royal Decree-law 23/2020

The Royal Decree-law 23/2020 (RDL 23/2020) of 23 June came into force in Spain on 25 June, approving energy measures (among others) to promote energy reform and reactivate the economy.

The RDL 23/2020 measures set out the guidelines that will govern the energy sector in the coming years. We highlight the following:

Regulation of access and connection permits

The main change introduced by RDL 23/2020 is the establishment of a series of conditions to maintain the right of access and connection to the electricity grid for the operators of power plants. To this end, attention will reside on the technical viability and the soundness of the projects through the fulfillment of administrative milestones. Their non-compliance will generally lead to the automatic revocation of the granted access permits and, where appropriate, of the connection permits. Moreover, it will imply the immediate execution of the financial guarantees presented by the processing of projects.

This measure represents a significant risk for investors due to the high amounts of guarantees they must deposit when requesting access and connection permits.

RDL 3/2020 also establishes a moratorium of new access requests until the government approves a new regulation.

Consideration of the same installation for access and connection permits

The granting of access and connection permits shall be subject to the condition that the plant is the same as the one for which the application for access and connection was requested, despite having been modified. In this respect, the consideration of the same plant will take place as long as none of the following characteristics are modified:

• Generation technology
• Access capacity
• Geographical location

If not met, a new request for access and connection will be necessary.

Other legislative measures

Another new feature of the RDL 3/2020 is that certain modifications of energy installations will not require prior authorization; a construction or operation permit, as the case may be, will suffice.

RDL 23/2020 also provides for the regulation of new forms of participation in the electricity system that were insufficiently regulated, such as hybridization, independent aggregators, or renewable energy communities.

Finally, the rule envisages a new remuneration framework awarded through a competitive mechanism, tenders, in which the energy remuneration price will be the variable on which it will be bid. This remuneration scheme will be geared towards cost efficiency and will be able to distinguish between different generation technologies based on their technical characteristics, size, levels of manageability, location criteria, technological maturity, and those others that ensure the transition towards a decarbonized economy.

The measures introduced by Royal Decree 3/2020 entail a major reform of the Spanish energy system and mainly affect its investment phase due to the increase of financial risks related to the viability of the project.

The implementation of audits or Due Diligences is, therefore, crucial to ensure and minimize the costs and risks of said investments.

Rebeca Pérez Yáñez

If you need additional information on the energy reform in Spain or the measures introduced by the RDL 23/2020,