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On 11 October 2024, Spain's Official State Journal (Boletín Oficial del Estado, or BOE) published Circular 1/2024, of 27 September, which establishes the methodology and terms and conditions for electricity consumption facilities to access the transmission and distributions networks (Circular 1/2024), issued by the National Markets and Competition Commission (the CNMC).

Versión en español

However, Circular 1/2024 will not enter into effect immediately: it will enter into effect on 11 January 2025, three months following its publication in the BOE. Furthermore, some if its main elements, particularly the granting of what is called "flexible access capacity" (where the supply of power is not guaranteed throughout the year), will only apply when the CNMC approves the detailed specifications that develop the provisions of Circular 1/2024 – until that occurs, and as established in the Circular's first transitional provision, flexible access capacity permits cannot be applied for or awarded.

Circular 1/2024 therefore includes a partial regulation of access and connection applicable to energy demand facilities. On the one hand, it must be completed with the provisions of Royal Decree 1183/2020, of 29 December, on access and connection to the electricity transmission and distribution networks (RD 1183/2020); and, on the other, the full application thereof is conditional on the approval of implementing regulations, in the form of detailed specifications (the approval process of which is provided for in article 18 of the Circular1).

Scope of application

To whom does Circular 1/2024 apply?

Circular 1/2024 applies to the applicants for energy demand access and connection permits and, specifically: i) to consumers; ii) to distributors that apply for access to the networks of another distributor or supplier; iii) to the owners of closed electricity distribution networks, as regulated in Royal Decree 314/2023, of 25 April, which implements the procedure and the requirements for granting administrative authorisation for closed electricity distribution networks; and iv) prospectively, to any persons conferred a right to apply for and obtain energy demand access and connection permits.

Logically, it also applies to the owners and the managers of the electricity transmission and distribution networks, which grant the corresponding permits.

Objective content

The Circular includes provisions on both the initial application for grid access and connection permits as well as applications to increase power or to modify a facility's grid access and connection permits that have already been awarded (in the case of generation facilities, this tends to be referred to as an "update" of the permits). It is assumed that the procedure for making applications will be the same in each case.

An obligation is placed on network managers to make available to interested parties forms to apply for new grid access and connection permits as well as those used to apply to update existing permits.

Provisions on the processing of applications and granting permits

Content of applications: applying for flexible access capacity

Annex I of Circular 1/2024 establishes the content that applications for energy demand access and connection permits must have, drawing a distinction, on the one hand, between those made by consumers and, on the other, those made by distributors and the owners of closed distribution networks. In addition, it should be borne in mind that consumers seeking access for a power capacity not exceeding 15 kW and that are not exempt from the obligation to apply for grid access and connection in accordance with article 17.2 RD 1183/2020, may use the short-form procedure, in which case the content of the application will be much shorter and simpler, as set out in Annex of Circular 1/2024.

Without entering into detail on the information and documentation that must be submitted along with the grid access application in the case of consumers with a power capacity not exceeding 15 kW, it should be pointed out that the applicant must specify the type of facility requiring the new power supply and the intended use thereof. Especially, a lease or ownership contract, or an agreement for use of the plot for which the permits are requested, must be provided, or, otherwise, a preliminary agreement that makes the purchase or lease conditional on the obtainment of a grid access permit2.

Another new element included in Circular 1/2024 is that interested parties may apply not only for fixed access capacity, but also flexible access capacity (once detailed specifications are approved that make this possible).

Flexible access capacity applies where the requirements for awarding fixed or conventional capacity are not met in full, whereby supply cannot be guaranteed throughout the year. The Circular establishes that, for flexible access capacity to be awarded, the applicant must request flexible access capacity expressly and the analysis of grid access must conclude that the facility may at least consume a certain percentage of hours per year. It is left to the detailed specifications that develop Circular 1/2024 to specify that percentage and, as appropriate, to set a distinction between the different types of flexible access capacity.

Evaluation of applications

Annexes III, IV and V of Circular 1/2024 set out, respectively, the criteria that should be applied to assess access capacity, connection viability and the potential impact that demand facilities could have on another network, with a view to issuing a viability report (informe de aceptabilidad).

However, Circular 1/2024 establishes that, until detailed specifications are approved that implement it, the same technical criteria on the security, frequency and quality of supply and on the economic efficiency and sustainability of the electricity system as used when the Circular entered into effect will continue to apply.

Circular 1/2024 also establishes that the network managers and owners may propose solutions that entail sharing network connection facilities with other applicants, when this would result in better efficiency and a lower cost for the system and interested parties. This possibility must, in any event, respect the chronological order of applications and the maximum deadlines for assessing applications established by RD 1183/2020 and will require the prior agreement of all the parties.

Result of the evaluation

Circular 1/2024 establishes that the application may only be denied due to a lack of available access capacity or due to lack of viability of connection. In either case, a report must be attached to the decision containing the data, references and calculations made that justify the denial.

If the analysis has shown the existence of access capacity, the prior proposal should indicate: i) the maximum fixed access capacity available – only if expressly requested, it will also indicate the flexible access capacity available (in which case an access capacity study will also be provided to make the applicant aware of any possible restrictions); ii) the connection point and its technical parameters; iii) the technical terms and conditions of the works necessary to make the connection to the network; iv) a financial proposal of the costs that the applicant will have to pay; and v) existing repayment agreements (convenios de resarcimiento) that affect the facilities involved in the proposed solution.

Content of permits and potential revocation

Circular 1/2024 details the content that grid access permits must have, drawing a distinction between permits for fixed access capacity and permits for flexible access capacity (the contents of which are more complex, as they need to include information related to the terms and conditions for the limitation or reduction of demand power).

The permits must make reference to the prior proposal document and cannot include terms and conditions that are more restrictive than those included in the proposal.

Circular 1/2024 establishes that permits may be revoked as a result of breach of the technical or financial terms and conditions set out in them. If the permit includes fixed capacity and flexible capacity and the breach only affects the terms and conditions applicable to one of them, the permit may remain in effect in respect of the part that has not been breached.

Other provisions

Content of the project engagement contract

Article 10 of Circular 1/2024 regulates the content that project engagement contracts (contrato de encargo del proyecto) must have, which the permit holder should sign with the network owner to perform the work to connect to the network, payable by the permit holder.

Content of the technical grid access contract, network connection and start-up

Articles 11 and 12 of Circular 1/2024 regulate the content of the technical grid access contract and the requirements for processing the connection to the network and start-up.

Transparency

Circular 1/2024 contains detailed provisions on the information and transparency obligations imposed on network managers in relation to the granting of power demand access permits.

In particular, it establishes that platforms used by the network managers must make it possible to view all phases of the application process, setting out the engaged party, the applicable terms and the specific information that must be provided in each phase. It also imposes an obligation to provide a channel that allows applicants to easily obtain information on the status of their application – their questions and responses, including time, date and content, must be properly logged.

The Circular also establishes that network managers must publish information on node access capacity, disaggregated by busbar or even (at voltages greater than 66 kV) by connection point. This information must be updated on a monthly basis. This information will be required from the moment established in the detailed specifications.

Network managers are given 10 months from the date on which Circular 1/2024 enters into effect to adapt the content on their websites.

Amendments to Circular 1/2021, dated 20 January

Finally, Circular 1/2024 makes a number of amendments to the CNMC's Circular 1/2021, of 20 January, which establishes the methodology and terms and conditions for electricity production facilities to access and connect to the transmission and distributions networks.

These amendments primarily affect grid access applications for storage facilities that consume power from the grid. It is established that those facilities' access capacity from a power demand perspective will be determined according to the criteria established in Circular 1/2024. The new Circular also establishes, among the information that network managers must include on their websites, the requirement to reflect in disaggregated form the capacity available for standalone storage facilities.

Circular 1/2024 also sets out detailed provisions regarding the information that network managers must offer on their websites in relation to the processing of applications for facilities that generate power for self-consumption (on terms similar to those provided in Circular 1/2024 for monitoring demand access applications). And it includes provisions regarding the procedure approving the detailed specifications that implement Circular 1/2021 identical to those contained in article 18 of Circular 1/2024.

 

1 The procedure is complex. It begins with the creation of a working group, the conclusions of which act as a basis for the transmission network manager and the managers of the distribution networks to draft proposals of the detailed specifications, which will be submitted for consultation with interested parties and agents for a period of at least one month. Following that, those proposals will be sent to the CNMC together with a report that contains a reasoned explanation of the inclusion, or otherwise, of the feedback received during the consultation process. The CNMC may accept the proposals or, if it understands that they are not appropriate, not do so and open a process to approve different specifications. In any event, before approval they will be sent to the Ministry for the Ecological Transition and Demographic Challenge for its report, and they will be sent for further consultation. They will ultimately be approved by Resolution and published in the BOE.

2 This last requirement has no equivalent in the case of applications for grid access permits for generation facilities; this can, in part, be explained by the fact that power demand facilities (by contrast to generation facilities) are not included in the public utility declaration provided under article 54 of the Spanish Electricity Sector Law 24/2013, of 26 December (and do not, therefore and as a general rule, have access to expropriation proceedings). However, it should be taken into account that the power infrastructure of e-vehicle charging stations with a power output exceeding 3,000 kW are included in that provision, and that it is also possible for industrial or other projects to which the power demand access application is instrumentally linked to have been the subject of a public utility declaration, and in both cases the appropriateness of this documentary requirement would be dubious.

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Iria Calviño

Partner, Madrid

Iria Calviño
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Guillermo Uriarte Senén

Partner, Madrid

Guillermo Uriarte Senén
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Miguel Fraga

Partner, Madrid

Miguel Fraga
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José Ramón Mourenza Díaz

Of Counsel, Head of Energy Regulatory, Madrid

José Ramón Mourenza Díaz
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Esther Lumbreras

Of Counsel, Madrid

Esther Lumbreras
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Miguel Ángel Barroso López

Of Counsel, Madrid

Miguel Ángel Barroso López
Iria Calviño Guillermo Uriarte Senén Miguel Fraga José Ramón Mourenza Díaz Esther Lumbreras Miguel Ángel Barroso López