Royal Decree-Law 18/2026 of 29 June: Spain's electricity sector faces a new regulatory framework of structural significance

Royal Decree-Law 18/2026 of 28 June, adopting certain measures within the framework of the Comprehensive Plan to Address the Crisis in the Middle East (the “RDL 18/2026”), introduces several new developments in the energy sector, with particular impact on Royal Decree-Law 7/2026 of 20 March, approving the Comprehensive Plan to Address the Crisis in the Middle East (the “RDL 7/2026”), which it amends and expands in several respects; and on Act 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

RDL 7/2026 introduced the PRC as a mandatory periodic payment for holders of permits for access to and connection to the grid for demand. The underlying rationale for the PRC is the ‘reservation’ of electricity grid capacity; consequently, developers of electricity-consuming facilities connected at a voltage of 1 kV or higher are required to pay a fee for this reservation whilst the project is not operational. An annual non-compliance rate exceeding 10% previously resulted in the automatic expiry of the access and connection permit. RDL 18/2026 tightens this regime, and this 10% threshold is now calculated on a calendar-quarter 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.

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 date of Royal Decree-Law 7/2026

For holders of on-demand access and connection permits with pre-existing access and connection permits who have not yet signed the Technical Access Contract (CTA), it is clarified that the four-year period for formalising this contract is calculated from the entry into force of RDL 7/2026 (22 March 2026), regardless of when the access and connection permit was granted (the original wording was ambiguous and could have been interpreted as meaning that the period began at the time the access and connection permits were granted).

In practice, this means that projects with permits obtained years ago do not have their timeframe reduced by the time already elapsed, but instead have a full four years from 22 March 2026. This clarification reduces uncertainty regarding when the right expires and facilitates financial and technical planning for developers.

4. Shared grid connection: new legal obligations for generators

Three new express obligations for facilities with shared grid connection are incorporated into Law 24/2013 of 26 December on the Electricity Sector (the “LSE”): (i) the operation of shared grid connection infrastructure must comply with the provisions laid down in the regulations; (ii) generation facilities with shared transmission 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 they are intended to strengthen system security by imposing obligations on the operators of such lines and providing transmission and distribution system operators with greater visibility over their operation.

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 features: (i) for the 2026 financial year, a 30 per cent reduction is applied to the remuneration forming part of 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, a reduction in the tax rate to 3.5% is envisaged; and from the 2028 financial year onwards, the rate is set at 0%, which effectively means the abolition of the tax (although, until it is repealed, it will be necessary to continue complying with the formal obligations – i.e., the submission of self-assessment returns and the annual summary).

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

Generation facilities eligible for the specific remuneration scheme receive remuneration calculated on the basis of parameters that include the IVPEE, which is set at 7% in the calculation models. Under the new IVPEE tax structure, Royal Decree-Law 18/2026 provides for a review of the remuneration parameters for the 2026–2028 regulatory sub-period, which will have a direct impact on the financial models for that sub-period.

The parameters will be updated by ministerial order, subject to the approval of the Government’s Delegated Commission for Economic Affairs, within three months of the entry into force of Royal Decree-Law 18/2026.

In practical terms, this means that the tax savings for facility owners are offset by a reduction in the specific remuneration, so the net result for the facility owner is (or should be) neutral.

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

RDL 18/2026 expressly classifies 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. 

This measure is intended to pass on the reduction in the IVPEE to consumers as a whole, but the relevant bilateral contracts will need to be analysed on a case-by-case basis to determine the effect of this classification on the private legal relationships between the parties to those contracts (it is common for such contracts to expressly exclude a change in the IVPEE as a ground for adjusting their terms).

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