The auction for the allocation of the specific remuneration regime for new renewable facilities in the mainland electrical system has been called

Written on 3 Apr 2017

The Government has published Royal Decree 359/2017 of 31 March, which establishes the call for the granting of the specific remuneration regime to new facilities for the production of electrical energy from renewable energy sources in the mainland electrical system.

In order to assist the achievement of the binding objectives set out in Directive 2009/28/EC of the European Parliament and of the Council dated 23 April 2009 on the promotion of the use of energy from renewable sources, Royal Decree 359/2017 of 31 March was published on 1 April in the Official State Gazette (B.O.E.), establishing a call for the granting of the specific remuneration regime to new facilities for the production of electrical energy from renewable energy sources in the mainland electrical system (“RD 359/2017”).

The aim of RD 359/2017 is to approve the call for a new auction for the perception of the specific remuneration regime and the determination of the standard value of the investment for each new renewable energy production facility, with a maximum limit of up to 3,000 MW of installed capacity, in order for more cost-efficient projects to be awarded.

As mentioned, the auction is only intended for those new installations that are located in the mainland electrical system, regardless of the technology used. Therefore, island and non-peninsular systems which require the approval of a specific call are excluded.

For the purposes of this new auction, “new installations” are defined as those that do not have a definitive operating authorization and have not been definitively recorded in the administrative authorities Register for the production of electrical power prior to the entry into force of RD 359/2017.

In contrast, those facilities whose construction entails the closing or the reduction of power of other facilities of the same technology and/or that have been constructed using main equipment that is not new or that has had a prior use are excluded from participating in the auction. It should be noted at this point that RD 359/2017 has eliminated the exclusion established in the Proposal of said Royal Decree, in which, in addition to the two scenarios referred to previously, the possibility of granting the specific remuneration regime to those facilities which would have been granted the right to receive the premium economic regime, the specific remuneration regime or any other economic regime related to renewable energies, cogeneration or waste, prior to this royal decree taking effect were also excluded. This elimination, de facto, involves the possibility of participating in the auction regarding those facilities which, despite having obtained the right to receive some of the premium remuneration regimes, would not have been able to commence construction for whatever reason.

In addition to the approval of the Royal Decree considered in this Legal Alert, the auction will be regulated by Order of the Ministry of Energy, Tourism and Digital Agenda, which will establish the allocation mechanism of the specific remuneration regime and the applicable payment parameters in the competitive concurrence procedure, the approval of which is imminent. In this regard, we must point out that on 7 February 2017, the CNMC issued a Report on the Proposed order to regulate the allocation procedure for the specific remuneration regime in the call for new electrical power production facilities from renewable energy sources, convened under Royal Decree, […] and approval of their payment parameters.

For its part, the procedure, rules and calling for the auctions will be established by way of a resolution of the Secretary of State for Energy, a draft of which has not been published to date.