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Impact of RD-LAW 23/2020 on projects under development7 July 2020

The Royal Decree-Law 23/2020 (“the RD-Law”), which approves measures in the field of energy and other areas for economic recovery, entered into force on 25 June 2020.

In this article, we provide a limited analysis of those changes introduced by the RD-Law which we believe will have the greatest impact on renewable energy projects currently under development in Spain.

How does RD-Law affect my project under development?

The RD-Law applies to generation projects currently under development. The main modifications a developer must take into account are the following:

  1. Milestones
  • Access permits for electricity generation facilities granted prior to the entry into force of RD-Law 23/2020 must comply with the following deadlines starting from the entry into force of RD-Law 23/2020:
Access permit date
28 /12/2013 to 31/12/201701/01/2018 to 24/06/2020
Application for the connection permitN/A6 months
Admission of the Prior Administrative Authorisation application (AAP)3 months6 months
Granting of favourable DIA¹18 months22 months
Granting AAP21 months25 months
Granting AAC²24 months28 months
Granting AAE³5 years5 years
  • Additionally, from the entry into force of the RD-Law, a six-month maximum term is established to request a connection permit or grant an access permit should it be posterior;
  • Access permits for electricity generation facilities granted after the entry into force of RD-Law 23/2020 must meet the following milestones, starting from the date of the access permits:
Deadline
Application for the connection permit6 months
Admission of the Prior Administrative Authorisation application (AAP) 6 months
Granting of favourable DIA22 months
Granting AAP25 months
Granting AAC28 months
Granting AAE5 years
  • Failure to provide evidence to the corresponding grid operator of the fulfilment of said milestones will mean the automatic expiration of all access and connection permits and the immediate execution of their guarantees. An exception might be made if, for reasons not attributable to the developer, a favourable environmental impact statement cannot be obtained. In this case, it is possible that the pending Royal Decree and Circular on developing access and connection procedures to be approved within three months, will expedite the process for the potential execution of access and connection guarantees.

"Projects which split after the granting of access and connection permits will be considered as separate new projects and will require a new access and connection permits process."

2. Validity of access and connection permits: consideration as the same generation facility for the purposes of access and connection permits

The RD-Law 23/2020 adds additional Provision 14 and Annex II to the RD 1955/2000, regarding the criteria required to consider a generation facility as the same for access and connection permits purposes. In accordance with the new Annex II of RD 1955/2000, an electricity generation facility will be considered to be the same if none of the following characteristics are modified:

  • Location: The location will not be considered changed if the geometric centre of the generation facilities, excluding the evacuation facilities, does not differ by more than 10,000 metres;
  • Access capacity: The access capacity requested or granted in the original access permit may not be increased by more than 5%.

If access capacity is reduced, it will not be considered as maintained if the decrease is as a result of a reduction in installed or nominal power following the split of  project into two or more projects whose total capacity is equal to the original project’s power. Projects which split after the granting of access and connection permits will be considered as separate new projects and will require a new access and connection permits process;

  • Generation technology: Generation technology shall not be considered a modification if: (i) the synchronous or asynchronous character of the facilities is maintained; (ii) the facilities  are subject to RD 413/2014 and belong to the same group as per article 2; and (iii) energy storage elements have been added.

In the case of a hybridisation of facilities already in service, or projects that have already been granted access permits, this condition shall only apply to existing electricity generation modules or those to which the access permit already granted refers.

Considering this, and depending on whether a facility could be considered the same for access and connection permits purposes, the promoter shall request an update to the application/access and connection permits. Alternatively, if the facilities are not considered the same, a new application for the access and connection permits shall be submitted as follows:

 

In this context, changing the geographical location of projects with access and connection permits granted with respect to the location initially proposed for obtaining said permits, was a practice that was not prohibited or conditioned by the regulatory framework in place until RD-Law 23/2020. In most cases, these changes in location are a consequence of environmental limitations or constraints detected by the developer in the initial location, or the existence of land with the same, or better, resources available closer to the connection point. Doubts may arise regarding the application of these criteria to access and connection permits already granted. In particular, regarding the criteria linked to geographical location, as many projects, when applying for access and connection, have not definitively determined their facility’s location. It should be noted that:

  • The new Annex introduced in RD 1955/2000 establishes its application for “the purposes of granting the access and connection permits requested and the validity of the access and connection permits already granted”;
  • RD-Law 23/2020 does not foresee any transitory or unique regimes excluding the application of the new additional Provision 14 of RD 1955/2000 to those projects that obtained access and connection permits before 25 June 2020. Indeed, the transitional Provision 3 of RD-Law 23/2020 establishes a specific transitory regime in respect to the application of the provisions of paragraphs 2 to 8 of article 3 (in relation to the administrative authorisations procedure) depending on the degree of progress in the administrative processing of the facilities. However, no transitory or unique regime has been established for the provisions of paragraph 9, which is precisely the paragraph approving the new additional Provision 14 of RD 1955/2000, nor paragraph 10, which approves the new Annex; and
  • Therefore, if, following the entry into force of the RD-Law, a change in geographical location is made (in the terms established in Annex II) for a facility with access and/or connection permits requested and/or granted before that date said change would imply, in accordance with the provisions of section 3 of the new additional Provision 14 of RD 1955/2000, the need of a new access and connection request to obtain new permits. This request would not be possible until the moratorium, approved under this RD-Law, is lifted.

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"RD-Law 23/2020 allows holders of permits obtained after 27 December 2013 to resign them and their access and connection rights within three months."

3. Possibility of resignation without enforcement of the guarantees

RD-Law 23/2020 allows holders of permits obtained after 27 December 2013 (and before the entry into force of the RD-Law) and those whose permits are in the process of being obtained, to resign them and their access and connection rights within three months of the entry into force of the RD-Law. This waiver would imply the return of the guarantees deposited for the access and connection.

4. Non-substantial modifications in the administrative authorisations

RD-Law 23/2020 modifies RD 1955/2000 regarding the regulation of cases of non-substantial modifications carried out in generation facilities, which was required to speed up the process of minor modifications. It regulates:

  • The conditions under which modifications to generation facilities which obtained AAP can be granted with the AAC, without applying for a new AAP; and
  • The conditions under which a change to a production facility is considered as non-substantial, requiring only the commissioning certificate, and neither the AAP nor the AAC.

What about the new applications?

The first transitory provision of the RD-Law approves a “moratorium” on grid access applications, thus, new requests for access permits for electric power production plants or for the existing capacity will not be accepted by the grid operator from 25 June 2020 in relation to the existing capacity or the one later released as a consequence of withdrawals, expiration or any other supervening circumstance in regards to the access and connection rights, until the Government and the National Commission of Markets and Competition approve, respectively, the Royal Decree and Circular regulations that develop article 33 of Act 24/2013.

In this sense, final Provision 8 of the RD-Law mandates both bodies for the approval of these provisions within a maximum period of three months.

It is important to highlight that this “moratorium” only applies to new access requests, not to connection requests. In other words, projects which have already obtained their access permit will have to request the connection permit within the applicable deadlines.

Notwithstanding, the following requests are exempt from the moratorium:

  • Access requests for which, upon the entry into force of the RD-Law, proof of deposit for access and connection guarantees of articles 59.bis and 66.bis of RD 1955/2000 have already been sent to the competent administration;
  • Access and connection requests to guarantee a fair transition;
  • Access requests for self-consumption production plants which are connected to the distribution grid; and
  • Access requests for consumers.

"Projects which have already obtained their access permit will have to request the connection permit within the applicable deadlines."

In addition, the provisions of RD-Law 15/2018, regulating that the granting of access and connection to the grid through new positions which, although not included in the energy planning process, meet certain requirements, are no longer effective.

Other matters of interest:

New auctions: In addition to the aforementioned, RD-Law 23/2020 entitles the government to approve a remuneration regime alternative to the specific regulated remuneration regime. This new remuneration regime will be granted through a competitive tender process dedicated to electrical energy, installed power or a combination of both, in which the remuneration price of said energy will be the variable to offer.

Hybridisation, storage and overcapacity: As detailed before, one of the criteria to consider – whether a facility is the same for access and connection permits purposes – is the hybridisation of existing renewable facilities or the incorporation of storage is allowed without the need to request a new access and connection permit to the one already granted. Furthermore, granting an administrative authorisation is allowed for an installed capacity greater than the access capacity.

R+D+i: the possibility of establishing a special authorisation procedure for R+D+i facilities and the introduction of what are called “regulatory sandboxes” for the development of pilot projects are regulated.

New subjects in the electricity sector. The following actors are included in Act 24/2013:

  • Holders of storage facilities: owners of facilities in which the final use of electricity is deferred to a later time than when it was generated, or which converts electrical energy into a form of energy that can be stored for subsequent conversion of said energy into electrical energy.
  • Independent aggregators: market participants combining multiple consumptions or electricity generated from consumers, producers or storage facilities for sale or purchase in the electricity production market, not related to the customer’s supplier.

Renewable energy communities: legal entities based on the open participation of members located in the vicinity of renewable energy projects of which they are owners. Their primary purpose is to provide environmental, economic or social benefits to their members or members or to the areas locations where they operate, rather than financial gains.

[1] Environmental Impact Assement (“Declaración de Impacto Ambiental”)

[2] Construction Administrative Authorization (“Autorización Administrativa de Construcción”)

[3] Operating Administrative Authorization (“Autorización Administrativa de Explotación”)

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