Developments on renewable energies claims against the Kingdom of Spain

The Spanish Government approved by means of the Royal Decree-law 17/2019, of 22 November, of urgent measures for the necessary adaptation of remuneration parameters that affect the electricity system and which responds to the process of cessation of activity of thermal generation plants, a new regulation according to which, for the regulating period starting from 1 January 2020, the value upon which the reasonable return of the renewable facilities revolves, will be of 7.09%. Nevertheless, the State guarantees a reasonable return of 7,398% for the two regulatory periods (until 31 December 2031) for renewable facilities, in exchange for their owners waiving, among other things, the enforcement of favourable awards they had obtained against the Kingdom of Spain in international arbitrations, or the renounce to the arbitration or judicial proceedings against the cut in remuneration scheme of renewable energies.

The deadline to express that resignation expired on September 30, 2020.

The United Arab Emirates company Masdar Solar & Wind Cooperatief, which had obtained an ICSID award in its favour of 64.5 million euros (which reaches up to 80 million with interest), has renounced it to take advantage of the new regulation approved by the Royal Decree-Law 17/2019. It has been the Minister for the Ecological Transition, Teresa Ribera herself, who has announced through her Twitter account the resignation of Masdar and its acceptance of the new regulation.

To have a comprehensive understanding of the impact of the new regulation, it must be recalled that, of the 10,000 million euros of pending claims against the Kingdom Spain before the ICSID, according to information from the Ministry for the Ecological Transition, it only appears that the Masdar award is the only one, so far, whose execution has been waived by the investors. Some information suggests that in these days the resignation of the arbitrations of two other investors will be known

It does not seem that this is a victory for the Spanish Government, because, in fact, the vast majority of investors have not renounced arbitration or judicial proceedings, and they maintain their open war for the cut in the remuneration of renewable energies.

This is just the latest chapter in a long series between the Spanish Government and international investors for cuts in the remuneration scheme to renewable energies.

It should be remembered that both the Kingdom of Spain and the European Commission are discussing, beyond the borders of the European Union, the legitimacy of arbitration vis-à-vis investors from EU countries, on the basis of the Achmea doctrine of the Court of Justice of the European Union.

In June 2020, Spain succeeded in annulling an award in ICSID, which ordered Spain to pay 128 million Euros to the Eiser Fund. The award was annulled on the grounds that one of the tribunal members lacked independence and impartiality due to a longstanding professional relationship with one of the claimants' expert witnesses. At the time of annulment, the award ordered was in the most advanced stage of execution, as the Federal Court of Australia had already enforced the award and Eiser had requested the seizure of property from Spain in Australia.

Some sources also point out that, from the Government, subjected to pressure from environmentalist pressure groups, it would be well seen the denunciation of the Energy Charter Treaty, which has led to most of the convictions against Spain for its remuneration policy for renewable energies, adopted in the context of the fight against the systematic tariff deficit in the Spanish electricity sector.

To be continued.