Royal Decree-Law 18/2026 of 29 June: the electricity sector facing a new regulatory framework of structural significance

Royal Decree-Law 18/2026 introduces several new provisions in the energy sector, with particular implications for Royal Decree-Law 7/2026, which it amends and expands in several respects; and for Law 24/2013 of 26 December on the Electricity Sector.

1. The Capacity Reserve Payment (PRC): The expiry threshold for permits changes from annual to quarterly

Royal Decree-Law 7/2026 introduced the PRC as a mandatory periodic payment for holders of permits for access to and connection to the grid. The underlying rationale for the PRC is the ‘reservation’ of electricity grid capacity; consequently, developers are obliged to make a payment in return for this reservation whilst the project is not operational. An annual non-compliance rate exceeding 10 per cent previously resulted in the automatic expiry of the access and connection permit. Royal Decree-Law 18/2026 tightens this regime, and the 10 per cent threshold is now calculated on a calendar-quarter basis (previously on an annual basis), with non-payments also being accumulated from the start of the obligations. The expiry of the permit also entails the loss of the right to any reduction or refund of the PRC.

The practical effect is twofold: expiry now occurs more quickly (a single quarterly non-payment of 10% is sufficient, with no possibility of offsetting it at the end of the year), and the consequences are more severe (loss of refunds already accrued).

2. Grid repowering: extension of the simplified regime

RDL 18/2026 amends Article 22.2 of RDL 7/2026 to clarify that the simplified processing regime originally envisaged for the repowering of electrochemical production and storage facilities is also applicable to the repowering of transmission and distribution networks, provided that the modification does not involve a change to the affected route.

3. CTA: Four-year period calculated from the entry into force of Royal Decree-Law 7/2026

For developers with pre-existing access permits who have not yet signed the Technical Access Contract (CTA), the four-year period for formalising it is calculated from the entry into force of Royal Decree-Law 7/2026 (20 March 2026), regardless of when the access and connection permit was granted.

In practice, this means that projects with permits obtained years ago do not have their deadline shortened by the time already elapsed, but instead have a full four years from 20 March 2026. This clarification reduces uncertainty regarding when the right expires and facilitates developers’ financial and technical planning.

4. Shared dispatch: new legal obligations for generators

Three new explicit obligations for facilities with shared transmission infrastructure are incorporated into the Electricity Sector Act, which were previously absent from the Act: (i) the obligation for shared transmission infrastructure to be operated in accordance with the relevant regulations; (ii) generation facilities with shared transmission infrastructure must operate and maintain such transmission infrastructure in accordance with the terms set out in the applicable regulations; and (iii) generation facilities with shared transmission infrastructure must provide the system operator with sufficient information to ensure proper coordination between the networks, thereby enabling the safe operation of the system to be guaranteed.

The incorporation of these obligations into the LSE has immediate practical significance, as until now their regulation had been based on private agreements between co-owners or on administrative instructions, but without any direct regulatory consequences.

5. IVPEE: From temporary suspension to permanent abolition

In tax matters, the measure with the greatest structural impact under Royal Decree-Law 18/2026 is the gradual and permanent abolition of the Tax on the Value of Electricity Production (IVPEE). A new tax timetable is established with the following characteristics: (i) for the 2026 financial year, a 30 per cent reduction is applied to the payments forming the tax base and the instalment payments in the third quarter, rising to 40 per cent in the fourth quarter (whilst maintaining the current tax rate of 7 per cent for this period); (ii) for the 2027 financial year, the tax rate is set to be reduced to 3.5%; and from the 2028 financial year onwards, the rate is set at 0%, which represents the definitive abolition of the tax.

6. Update on the specific remuneration scheme: the tax saving does not imply higher remuneration

Renewable energy installations under the regulated remuneration scheme (wind, solar, etc.) had been receiving remuneration calculated on the basis of parameters that included the IVPEE, which was assumed to be 7% in the calculation models. With the new IVPEE tax structure, the Royal Decree-Law provides for a review of the remuneration parameters for the 2026–2028 half-period, which will have a direct impact on the financial models for the current half-period.

The parameters will be updated by ministerial order, subject to approval by the Government’s Delegated Commission for Economic Affairs, within three months of the Royal Decree-Law coming into force.

In practical terms, this means that the tax savings for developers are deducted from the amount they receive from the system, so the net result for the developer tends to be neutral.

7. Forward contracts and hedging: the regulatory change clause is triggered

The Royal Decree-Law expressly classifies the amendments to the IVPEE as a ‘regulatory change’ for the purposes of bilateral energy purchase and sale contracts and hedging instruments entered into prior to its entry into force.

Parties with contracts signed before 30 June 2026 should check whether they include clauses providing for adjustment in the event of a regulatory change, as the reduction in the IVPEE affects the agreed economic balance and may justify renegotiations.

Should you wish to obtain further information, please do not hesitate to contact any of our experts listed below or your usual contact at Osborne Clarke.