The grid access rights in Spain: a new regulation proposal for the cornerstone of the renewable energy projects

The Spanish Energy Regulator, National Commission on Markets and Competition (NCMC) has published a new regulation proposal for the requirements to access the grid for electrical facilities (Proposal). The procedure for obtaining grid access licences is one of the most relevant issues in the renewable energy generation plants projects. The deadline to submit comments is 05 July.

The saturation of the electricity grid access requests in the current regulation

Electricity grid access requests in Spain have skyrocketed particularly in the last months, according to the figures shown by the Spanish Electric System Operator, Red Eléctrica de España (REE) due to the new solar and wind power plants projected. At present, there are requests for a total of 147,300 MW (19,200 MW in the last two months). These figures constitute, according to the National Plan published by the Government, triple the amount of MW of those which are expected to be available until the year 2030, and approximately 50% more than the installed capacity in Spain in 2018 (103.884 MW in 2018). Of the total of 147,300MW requested, REE has "pre-authorized" access only to 56,100 MW to this day and this does not imply necessary the collecting of the final license. The future of all these applications is, therefore, uncertain. Furthermore, the imbalance between supply and demand has develop a shadow market of access licenses.

This uncontrolled increase can be explained, to a large extent, by the following failures contained in the current and scattered grid access regulatory framework (by this way 24/2013 Law, Royal Decree 1955/2000, Royal Decree 413/2014) (i) the licenses are assigned free of charge and with the almost exclusive requirement of providing guarantees (ii) to obtain the grid access, it is not necessary show a specific power project planned to develop. The current regulation allows, therefore, to submit applications based on speculative reasons and, by the contrary, in some cases, prevents other developed and viable energy projects from obtaining grid access licences.

The Proposal implications

In recent years, different initiatives for the improvement of the grid access regulation have been promoted in Spain, and even a grid access draft regulation was published by Government for comments in June 2018.

Nevertheless, with the approval of the Royal Decree-Law 1/2019, which complies with the provisions of article 37.6.a) of Directive 2009/72, the NCMC has acquired new regulatory authority, specifically, among other matters, regarding grid access matter. The Royal Decree-Law 1/2019 provides that (i) the Government retains the authority to establishes the criteria and procedures for grid access, in order to comply with the objectives of energy policy and implementation of renewable energy (ii) and the NCMC acquires the power to regulate the methodology and the conditions for grid access. This is a complex competence distribution criterion which is now been developed by both parties, being NCMC which has launched first proposal.

In accordance with the power acquired, the NCMC Proposal has the following main terms:

  1. integrate in a standard regulation the access proceeding for the generation plants
  2. simplify procedures and determine one interlocutor to request the access
  3. connect the access request with a specific generation project, maintaining the obligation to constitute guarantees 
  4. clarify the rules to consider the access priority right for the access request submitted to define a ranking
  5. regulate the different stages in the access request procedure with the purpose of granting legal security to all participants, and
  6. include measures to improve the use capacity of the access facilities efficiency.

The Proposal is in the public consultation phase and the possibility for the submission of comments has been enabled.

Special case: the grid access of the coal-fired and nuclear generation plants

In Spain there are 9,563 MW generated from coal-fired power plants and 7,098 MW and from nuclear plants. According to the Government's forecasts, these facilities will no longer be active in the coming years and then this access capacity will be free. Therefore, the question arises about the future of the grid access rights which nuclear and coal-fired plants currently hold and that will be available.

With the purpose of maintaining the current economic activity in the area, the Government has proposed in the fourth Final Provision of the Draft Law on Climate Change and Energy Transition, that the current owners of nuclear and coal-fired power plants, will retain the right use the grid access capacity for the implementation of new renewable facilities in the same area.

However, Article 8 of the NCMC Proposal provides an auction to assign the grid access rights that will be free of those energy facilities greater than 200 MW (coal and nuclear IE). The tenders in this auction trough a competitive concurrency procedure would offer an amount in € / MW to obtain the license for grid access at a specific point. The result of the auction would be the installed power per technology assigned to each participant. It is a novel solution because it would be the first time that the access licence is obtained exclusively based on the price tendered.

The proposals of the Government and the NCMC are incompatible with each other. RDL 1/2019 does not clarify if NCMC or Government is competent to determine the regulation for the allocation of the capacity free from cease of the coal-fired and nuclear plants. Therefore, in order to know what the final regulation will be, it will be necessary to determine who has the authority in the matter and what option is chosen. RDL 1/2019 establishes that, in case of discrepancies between the NCMC and the Government, a Cooperation Commission will be convened "with the purpose of seeking the understanding between the parties".

Regardless of the solution adopted, the current situation shows that the new government to be formed in the coming months, will have in its agenda as one of the priority points to address: the regulation of grid access procedure jointly with the NCMC.

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.