Renewables breathe in Spain: the fourth milestone is extended

On 29 June, the Official State Gazette (BOE) published Royal Decree-Law 5/2023 (the "RD-l") Among numerous measures, it extends by six months the deadline for compliance with the fourth milestone (to obtain and accredit administrative authorisation for construction), giving a respite to renewable projects that had until 25 July.

The RD-l adopts and extends certain measures in response to the economic and social consequences of the war in Ukraine, supporting the reconstruction of the island of La Palma and other situations of vulnerability; transposing European Union Directives on structural modifications of commercial companies and reconciliation of family and professional life for parents and carers; and implementing and enforcing European Union law).

Among the measures introduced by the RD-l, those affecting the energy field are structured in three blocks: (i) the regulatory principles of energy communities are incorporated into Spanish law; (ii) the deadline for obtaining administrative authorisation for the construction of renewable projects is extended by six months; and (iii) measures are taken with respect to the installation of high-power electric vehicle charging points and deductions are established in personal income tax for their purchase.

Energy communities

The RD-l transposes Directive (EU) 2018/2001 and Directive (EU) 2019/944, including the regulatory principles of energy communities in the Spanish legal system.

Energy communities allow citizens to collectively produce, consume, store, share and sell renewable energy. Their main purpose is to provide environmental, economic and social benefits to their members and the environment in which they operate, rather than financial profitability.

Two distinct entities are regulated, renewable energy communities (RECs) and citizen energy communities (CECs). Although these two concepts are similar, they differ in several aspects: (i) the REC is not limited to the electricity sector, while the CCE is limited exclusively to it; (ii) the REC must have an associated renewable energy project, while the CCE does not; and (iii) the REC admits small or medium sized enterprises as partners or members, while the CCE only admits small companies, thus excluding medium-sized companies.

Among the regulatory principles for energy communities included in this RD-l, it is envisaged that: (i) partners or members of them do not lose their end-consumer rights and obligations; (ii) these communities may access all appropriate energy markets directly or through aggregation on a non-discriminatory basis; (iii) they should be subject to fair, proportionate and transparent procedures, including registration and licensing, as well as network access tariffs that are appropriate and balanced to the overall system cost sharing; (iv) finally, they shall not be treated in a discriminatory manner with regard to their activities, rights and obligations as final customers, producers, suppliers, or other participants.

Extension of the fourth milestone

The RD-l extends by six months the deadline for renewable projects to obtain construction authorisation.

For facilities that have obtained an access permit between 1 January 2018 and 25 June 2020 (inclusive) the deadline will be computed from 25 June 2020, with a total period of 43 months to obtain the authorisation in question (the last day of the milestone will now be 25 January 2024).

For installations that have obtained an access permit from 26 June 2020 to 30 June 2023, the deadline is extended by six months from the date of obtaining the permit.

This extension of the deadline does not affect the fifth milestone, so the five year deadline for obtaining the definitive administrative authorisation for operation is maintained.

Electric vehicle charging point installations and tax deductions

The power of electric vehicle recharging facilities that are declared to be of public utility is extended, as well as those that are exempt from obtaining prior administrative authorisations for construction and operation, regulated in article 53 of the Electricity Sector Act.

With this amendment, only electric vehicle recharging facilities of more than 3 MW are declared to be of public utility for the purposes of expropriation (previously this limit was set at 250 kW).

In addition, installations with a capacity of 3 MW or less are now exempt from obtaining administrative authorisations (previously, those with a capacity of 250 kW or less were exempt).

Finally, the 15% deduction in Personal Income Tax (IRPF) for the purchase of a new electric vehicle is extended until 31 December 2024. Individuals will be able to access a 15% deduction in personal income tax if they install plug-in points to recharge the battery of electric vehicles in a property they own before 31 December 2024 if this system is not linked to an economic activity.

Should you wish to know more about the RD-l developments or any other regulatory issues in the sector, please do not hesitate to contact one of our experts listed below or your usual contact at Osborne Clarke.