Renewable energy projects in Spain

Loss of access and connection rights for renewable energy projects in Spain: new CNMC rulings regarding late environmental impact statements

The Spanish National Markets and Competition Commission (CNMC), acting as energy regulator, by way of a Resolution issued on 5 October, has ruled for the first time on the retroactive effectiveness of administrative milestones as a measure to avoid the expiry of grid access and connection permits. By means of this Resolution, the CNMC upholds the transmission grid access dispute raised by the affected companies and declare void the declarations of expiry of access and connection permits issued by REE (Spanish TSO).

Royal Decree-Law 23/2020 of 23 June, approving measures in the energy sector and other areas for economic reactivation, establishes a mechanism of administrative milestones (see below), whose non-accreditation within the established deadlines entails the automatic expiration of the access and connection permits granted.

Milestone

Admission of the application for the Prior Administrative authorisation

• Group 1 : 3 months
• Group 2 and 3 : 6 months

Obtaining the Environmental impact statement

• Group 1 : 27 months
• Group 2 and 3 : 31 months

Obtaining the Prior Administrative Authorisation

• Group 1 : 30 months
• Group 2 and 3 : 34 months

Obtaining the administrative construction authorisation

• Group 1 : 33 months
• Group 2 and 3 : 37 months

Obtaining the Start-up authorisation

• Group 1, 2 and 3 : 5 years

In the case addressed by the CNMC Resolution, the conflict focuses on whether it is possible to consider an administrative milestone to be fulfilled, as established in Article 1 of RDL 23/2020, when the administration issues it after the deadline, but recognises it as having retroactive effects, complying with the requirements set out in Article 39 (3) of Law 39/2015 of 1 October on the Common Administrative Procedure of Public Administrations.

The conflict arises from TSO's interpretation, which denies the validity of an administrative act, in particular an environmental impact statement, issued outside the time limit. In response to this, the CNMC argues that the expiry of the permits should not result from the mere expiry of the time limit, since the modulation of the effectiveness of administrative acts is a prerogative of the competent administration. On this point, the Resolution states that these acts issued by the competent public administrations enjoy the privilege of declaratory self-protection and, consequently, can only be invalidated by administrative courts.

From the above, it can be deduced that these administrative acts fall outside the scope of control of both the TSO and the CNMC itself. Having said that, the CNMC formulates a series of considerations in favour of retroactive effectiveness. In this regard, the CNMC considers the adoption of this measure would be more of an obligation than a possibility on the part of the administration, as otherwise the developer, even with the greatest possible diligence, could see his access and connection permits expired. In this respect, one might ask whether the late action of the competent administration would affect the principles of efficiency, good faith and legitimate expectations, as suggested by the Resolution.

Likewise, the CNMC points out that the interpretation maintained by the TSO is not justified by the purpose of the Royal Decree itself, which seeks the expiry of access permits for non-viable or immature facilities. The fact that the environmental impact statement is favourable shows the opposite, since the facility has progressed towards its correct start-up and only a purely specific issue derived from the actions of the competent public administration would lead to the expiry of the access and connection permits.

On another note, the CNMC rejects that the measure would cause prejudice to third parties with expectations regarding the access capacity that would be released as a result of the expiry of the permits, as this capacity had not yet surfaced. It might therefore be asked whether, as the CNMC points out, the emergence of capacity as a result of the automatic expiry of permits would operate as a limit to the retroactive effect of the act.

In short, the Resolution sets an important precedent, as it represents the first time that this controversial issue has been addressed. It is thus a crucial step in terms of establishing the guidelines to be followed by the bodies in charge of managing access and connection permits. Potentially a relevant figure of MW under development in Spain could be affected by this resolution.