The Spanish Government has approved Royal Decree 960/2020, of 3 November, which regulates the economic framework for renewable energy applicable to electricity production facilities (RD 960/2020), which was published in Spain’s Official State Journal (Boletín Oficial del Estado, or BOE) on 4 November 2020 and entered into effect the following day.
The approval of RD 960/2020 implements the provisions of article 14.7 bis of the Spanish Electricity Sector Law 24/2013 (LSE), established by Royal Decree-law 23/2020, of 23 June, which approves measures in the matter of energy and other areas to stimulate economic recovery.
Article 14.7 bis LSE authorised the Spanish Government to approve a new remunerative framework for future renewable energy facilities, which will have the following defining features: a) it would be based on a long-term fixed price for energy; b) it would be awarded by competitive tendering procedures in which electricity, installed power capacity, or a combination of both would be up for auction, and tenderers would make bids for the price of the remuneration for the energy produced; c) separate auctions may be held by technology on the basis, among other criteria, of their technical characteristics, scale, dispatchability, localisation or technological maturity.
RD 960/2020 applies those provisions creating a new remunerative framework for the generation of electricity from renewable sources, what is called the “remunerative framework for renewable energy” (régimen económico de energías renovables, or REER). The new remunerative framework will apply to all new facilities and to all enlargements or modifications to existing facilities.
It should also be pointed out that RD 960/2020 establishes a general regulatory framework that will have to be developed and implemented by means of an Order that establishes rules governing the auction mechanism and establishes the technologies and the terms and conditions for taking part, the product up for auction, as well as the parameters and the other elements that make up the REER (the Order). On 6 November, the Ministry for the Ecological Transition and Demographic Challenge started steps for approving the Order, submitting the Order proposal to public consultation.
Subject to that caveat, the essential features of RD 960/2020 are outlined below.
- Essential characteristics of the new remunerative framework
- Which facilities are eligible to receive the REER?
- How is the REER awarded?: new auction mechanism
- How and when are the characteristics of each auction defined?
- How are auctions conducted?
- How often are auctions held?
- What obligations do awardees have?
- What rights do awardees have? The price they will receive for the auctioned energy
- How will the REER be financed and paid?
- How long will the REER last?
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