Urgent measures in the field of energy in the framework of the National Response Plan to the economic and social consequences of the war in Ukraine

By means of RDL 6/2022, the government has made important regulatory modifications to different sectoral regulations in response to the consequences of the Russian invasion of Ukraine. Title I of this Royal Decree-Law is devoted to the measures adopted in the energy sector, of which we should highlight the following:

• Measures on renewable installations with Specific Remuneration Regime (RECORE)

Article 5 of RDL 6/2022 establishes a division of the regulatory half-period from January 2020 to December 2022 into two regulatory half-periods, the first for 2020 and 2021, and the second for 2022 only. In relation to the above, a mandate is established for the publication, within two months of the publication of RDL 6/2022, of an order establishing the new RECORE remuneration parameters, based on different considerations established in art. 5.5 of RDL 6/2022. These new parameters will be applicable from 1 January 2022, with the aim of correctly considering market revenues in order to adjust the revenues that the facilities must receive under the specific remuneration system.

In addition, the adjustment mechanism for deviations in the market price, which allows the estimated calculation of the pool for each half-period to be corrected at the end of the same, for energy generated in the year 2023 and subsequent years, is eliminated.

• Modification of RDL 17/2021 establishing the mechanism for the reduction mechanism

By means of the sixth additional provision of RDL 6/2022, the period of application of the reduction is extended from 31 March to 30 June 2022. In addition, the application of the reduction to energy subject to forward contracting instruments (PPA) is modified to include among the cases of application of the reduction that energy covered by a PPA that has been concluded (or renegotiated) after the entry into force of RDL 6/2022 and whose cover price is higher than 67 €/MWh.

On the other hand, it is established that in those cases in which energy is bilateralised, either directly or through intra-group hedging instruments, between generation and marketing companies of the same vertically integrated group, the hedging price used to calculate the reduction will be that passed on by the marketers to end consumers.

• Measures on self-consumption

As a measure to promote self-consumption, article 8 of RDL 6/2022 establishes that, for a period of two years, 10% of the total available capacity in the nodes that have been reserved for capacity tenders, in accordance with the provisions of RD 1183/2020, will be freed up to be used for new generation facilities, provided that they are associated with a form of self-consumption.

On the other hand, in relation to self-consumption, the electricity system charges have been modified. The new charges are set out in the first additional provision of RDL 6/2022.

• Measures to promote and speed up the implementation of renewable energies

New simplified procedures for the processing of renewable energy projects.

RDL 6/2022 establishes, in its articles 6 and 7, new simplified procedures for both environmental and substantive authorisation of renewable energy projects, with the intention of accelerating decarbonisation and reducing the energy dependence of Spain.

The first of these procedures, which is referred to in the regulation as the "procedure for determining the environmental impact of renewable energy projects", is temporary and applies to projects under the state jurisdiction, although it may be applied by the Autonomous Regions in their respective areas of jurisdiction. This procedure is reserved for wind projects of up to 75 MW and photovoltaic projects of up to 150 MW, with power lines of less than 15 kilometres and located entirely in areas of low and moderate sensitivity according to the "Environmental zoning for the implementation of renewable energies", a tool developed by the Ministry for Ecological Transition and the Demographic Challenge, and specifically, not located in the marine environment or in areas that form part of the Natura 2000 Network.

This procedure shall apply to projects for which the promoters submit the application for administrative authorisation provided for in article 53 of Law 24/2013, of 26 December, on the Electricity Sector, to the substantive body before 31 December 2024.

In the event of complying with these characteristics, and being subject to this procedure, they will not be subject to an environmental assessment, in the terms regulated in Law 21/2013, of 9 December, to the extent that this is determined in the report referred to in the regulation now approved, which establishes in detail the procedures to be followed. This report will lose its validity and cease to have any effect if the project is not authorised within two years of its notification to the developer. However, in the case of projects included in the scope of application of Article 1 of Royal Decree-Law 23/2020, of 23 June, which approves measures in the field of energy and other areas for economic reactivation, if the report determines that the project can continue with the corresponding authorisation procedure as no significant adverse effects on the environment can be detected, it will remain in force and will have the effect of fulfilling the administrative milestones referred to in sections 1.a).2.º and 1.b).2.º.

Finally, it is established that the environmental impact assessment report will not be subject to any appeal, without prejudice to any appeals that may be lodged in administrative or judicial proceedings against the project authorisation act, and that the procedure regulated in this article is not of a basic nature and will therefore only be applicable to the General State Administration and its public bodies. However, within their sphere of competence, the Autonomous Communities may apply the provisions of this article only to the projects referred to in paragraph 1.

Secondly, authorisation procedures are declared urgent for reasons of public interest for renewable energy generation projects under the jurisdiction of the General State Administration, which have obtained a favourable environmental impact assessment report and provided that their promoters request the simplified substantive authorisation procedure regulated by the regulation before 31 December 2024, a procedure which, based on the provisions of Royal Decree 1955/2000, allows the accumulation of certain procedures, shortening the total procedure periods by means of the joint processing and resolution of the prior and construction authorisations. In the event that the declaration of public utility is requested, this must be presented together with the applications for prior administrative authorisation and construction authorisation, accompanied by the documentation established in article 143 of Royal Decree 1955/2000, of 1 December, for simultaneous processing.

Promoting floating photovoltaics

By means of the sixth final provision of RDL 6/2022, the Water Law is amended to introduce a series of measures aimed at promoting floating photovoltaic installations in the public water domain, which may be the subject of concessions for a period of up to 25 years.

In the case of solar photovoltaic electricity generation installations on canals or other hydraulic works owned by the General State Administration or basin bodies, they will require the prior granting of a concession of ownership, which will be awarded on a competitive basis, except for applications submitted by communities of users and central boards of users that have been entrusted, by agreement, with the operation and maintenance of these canals or other hydraulic works.

Increasing the capacity of the distribution network

The fourth additional provision of RDL 6/2022 establishes the obligation for distributors, during the period from 2023 to 2025, to include in their investment plans actions aimed at increasing the capacity of their distribution network, representing at least 10% of the total volume of investment entitled to remuneration charged to the system. This new capacity must be intended to enable the evacuation of electricity produced by renewable primary energy sources and self-consumption facilities.

Boosting storage

By means of its fifth final provision, RDL 6/2022 establishes that storage facilities that are directly or indirectly connected to the transmission and distribution grid (both those known as "stand alone" and those that form part of a hybridised facility) will be treated in the same way as electricity production facilities. This legal equalisation is of great importance as it clarifies the application to this type of facility of the procedure foreseen for generation facilities, in order to obtain the relevant administrative authorisations and registration in the Administrative Register of Electricity Production Facilities.

• Taxation measures

The reduced rate of 10% of Value Added Tax (VAT) on electricity and the minimum rate of 0.5% of the Special Tax on Electricity (IEE) are maintained until 30 June 2022, and the suspension of the Tax on the Value of Electricity Production (IVPEE) is extended to the second quarter of 2022.

• Other measures linked to the energy sector

The sixth transitory provision of RDL 6/2022 extends the number of actors that must participate in the financing of the social electricity voucher (bono social eléctrico), and establishes the unit values applicable to producers, transmission grid operators, distributors, retailers and consumers.

The twentieth final provision establishes a modification of the "hydraulic tax", which increases from 22% to 25.5% of the tax base and will have a reduction of 90% for hydroelectric installations with a capacity equal to or less than 50 MW, as well as for hydroelectric installations for the production of electricity using pumped hydroelectric technology and with a capacity greater than 50 MW. Furthermore, in those hydroelectric facilities which, in accordance with the provisions contained in the final paragraph of Article 112 bis.7 of the revised text of the Water Act, are subject to incentives for reasons of national energy policy, the amount of the levy will also be reduced by 90%.

With regard to the natural gas Tariff of Last Resort (TUR), the application of the seventh additional provision of Royal Decree-Law 17/2021, of 14 September, is extended in the reviews of the price of the natural gas tariff of last resort corresponding to 1 April 2022 and 1 July 2022, establishing the maximum increase in the cost of the raw material, term Cn, at 15%, with the intention of containing its impact on consumers' final bills.

Should you wish to know more about the new regulation contained in the Royal Decree-Law and its possible repercussions, please do not hesitate to contact one of our experts mentioned below or your usual contact at Osborne Clarke.