Draft Royal Decree establishing the legal framework regarding self-consumption energy provision and self-supply power generation

Written on 3 Aug 2015

The Spanish Ministry of Industry, Tourism and Trade has drafted a Royal Decree aimed at combining the development of small-scale power generation, linked to power consumption and the establishment of monitoring systems.

This Draft Royal Decree is intended to boost the development of small renewable power facilities, creating a distributed power generation system through the sale of both surplus and instant self-supply. This system is intended to minimize the impact on the electricity system.

The scope is limited to the following self-consumption methods (as legally defined in Article 9 of Law 24/2013, of 26 December regarding the Spanish Electricity System):

  • Power supply combined with self-consumption

There is a singular participant: the consumer, who has not exceeded 100 kW contracted power capacity; and installs on their own network one or several energy-generating facilities not exceeding 100 kW power capacity, which are not registered as power generation facilities. The holder of the point of supply must be the same as the holder of the energy consumption equipment and the facilities connected to its own network.

  • Power generation combined with self-consumption

Where the consumer and producer interact. The consumer is associated with one or several power generation facilities on their own network, so that consumer and producer share the grid connection infrastructure. Facilities must be registered in the Spanish Registry of Power Generation Facilities.

This method is divided into: power generation facilities of any technology whose power-sum basis does not exceed 100 kW power capacity; and cogeneration facilities exceeding 100 kW of installed power capacity.

  • Power generation combined with self-consumption of the consumer connected to a power generation facility through a direct line

The consumer and producer also interact irrespective of the contracted power capacity.

The most remarkable aspects of the Draft Royal Decree are the following:

  1. It establishes the so-called “toll rates” that will be imposed on the self-suppliers whose power lines are connected to the framework. The reason for this measure is so that the distributed power generation system does not imply a reduction of distribution and transport grid maintenance costs. In this regard, it must be noted that the self-suppliers will benefit from the framework support even though when making use of self-supply (except when the facility is isolated from the framework). This is why self-suppliers will have to pay additional charges to cover the costs of the electricity system under the same conditions as all other power consumers. The Draft Royal Decree aims to avoid inefficient facilities. Said “toll rates” will be calculated taking into account the estimated costs of adjustment services for each period corresponding with mainland demand.
  2. The Draft Royal Decree creates the Spanish Registry of Self-Consumers (referred in Article 9.4 of Law 24/2013, of 26 December on the Spanish Electricity System), whereby every facility should be registered (except remote ones). Facilities will be continually monitored in order to develop performance and security mechanisms.
  3. It also establishes a reduction in the charges for costs of electricity for consumers located in Canary Islands, Balearic Islands, City of Ceuta and City of Melilla. In these locations self-consumption methods are cheaper than the transmission of energy from the mainland.
  4. Further, it modifies the Royal Decree nº 1110/2007, of 24 August, approving the regulation on measuring points of Spanish electricity system. This amendment is necessary to adapt current regulations to the new self-supply models. Particularly, it updates the regulation terminology and adds new border points.

Finally, it should be noted that the Draft Royal Decree is being called into question by industry representatives and regulatory bodies, who consider it to be inconsistent with the new European directives on renewable energies and energy efficiency.

The current criticisms noted by the industry, coupled with a lack of support, could result in a standstill and a refusal of the Council of Ministers to provide a final approval. In any case, this controversy may attract the attention of the Spanish Ministry of Industry, Tourism and Trade, to undertake a thorough review of the Draft Royal Decree for the purpose of adapting it to European directives on renewable energies, highlighting the benefits and savings for the electricity system generated by renewable facilities.