Approval of the Royal Decree-Law 17/2019: new parameters for the remuneration of the renewable facilities in Spain

As of Saturday, 23 November 2019, Royal Decree-Law 17/2019 has been published and approved by the Government. It includes urgent measures for the necessary revision of the remuneration parameters for the renewables facilities under the specific remuneration regime that affect the electrical system and that approve also the process for the cessation of activity of thermal power plants of generation (“RDL 17/2019”). RDL 7/2019 is part of the objectives set out in the Strategic Energy and Climate Framework and adopts, among others, the following issues:

• Approval of the reasonable profitability value applicable to the specific remuneration regime in the second regulatory period 2020-2025 (Regulatory Period). In accordance with the proposals of the National Commission of Markets and Competition, RDL 17/2019 updates the value of reasonable profitability that will be applied to renewable energy facilities included in the specific remuneration regime in the Regulatory Period 2020-2025. In that Regulatory Period, the value of the reasonable profitability will be 7.09% (at present, firs regulatory period, is 7.398% or 7.503% depending on the type of facilities).

• Update of the financial remuneration rate for the production activity in non-peninsular electrical systems with additional remuneration regime. RDL 17/2019 establishes that between 2020 and 2025, the financial compensation in these cases will be 5.58%. The last five years have been 6.503%.

• Extends the term for the approval of the Ministerial Order for setting the remuneration parameters for the perception of the specific remuneration regime in the Regulatory Period, until February 29, 2020. The reason is that, in Spain, there is an interim Government currently that cannot conduct the process for the approval of the Ministerial Order, before the new Regulatory Period that begins on 1 January 2020. The remuneration parameters that result from the new Ministerial Order shall apply with effect of initiation of said regulatory period.

• Exceptionally, the renewables facilities that had 'an additional remuneration' upon entry into force RDL 9/2013 (which implies the approval of the current remuneration regime) are allowed to be covered of the value for the first regulatory period (7.398%) which cannot be reviewed during the following two regulatory periods (2020-2025, and 2026-2031). However, to be covered under this exceptional system, renewables facilities on which an arbitration or judicial proceeding has been initiated previously, based on the modification of the specific remuneration regime after RD 661/2007 and RDL 9/2013, are required to prove the early termination of such procedures, or the waiver for the compensation recognized as a consequence of such procedures.

• Finally, RDL 17/2019 includes two measures for the fair energy transition. First, in relation to the granting of evacuation access to the network, the Government may regulate procedures and establish requirements so that, when conceding a new grant of access to a renewable energy project in the nodes where they are undertaken closures of facilities, social criteria, including the potential for employment generation, and environmental criteria are taken into account. Secondly, in the concession of water use associated with the plants that close, RDL 17/2019 addresses the criteria that must be followed for its granting such as social and environmental criteria.