Catalonia is promoting renewable energy by 2030 + Update fair value yield for existing plants

published on 13th February 2020

In recent days, the Spanish State and the Autonomous Community of Catalonia have taken measures to promote renewable energies in order to achieve the objectives of sustainable energy and to ensure the investments that renewable energies need in the energy sector. These changes gave the current producers and new investors the legal certainty that had been lacking in recent years and was hampering the development of renewable energies.

Catalonia repeals Decree 147/2009, which established a decade of restrictions on the renewable energy sector for the region.

This resulted in a discrepancy between the production and consumption of renewable energy in the region compared to other regions. The ordinance made it impossible to erect wind farms with more than 10 MW and led to territorial restrictions that restricted the installation zones for plants with a generation capacity of less than 10 MW, which also affected photovoltaic plants. The new measures are laid down in Decree 26/2019 of 26 November 2009.

The new law of 11 November regulates urgent measures for climatic disasters and the promotion of renewable energies in the region of Catalonia. The repeal of the measures of Decree 147/2009 was delayed due to recent events and should have taken place on 25 November 2009. This is expected to take place by October 2019, when the old 2009 decree expired. The government drafted a new decree lifting the restrictive measures in force until now. These have now been repealed by the new decree in order to achieve the targets set in the Catalan Climate Protection Act of 2017.

The Catalan climate protection law sets ambitious targets and was in complete contradiction with the previous decree 147/2009. The law sets a target of 50% renewable energy in Catalonia by 2030. This implies the need to increase exponentially the investments in renewable energy in Catalonia, as Catalonia currently needs wind turbines for 4,000 MW and photovoltaic systems for 6,000 MW by 2030. Currently, Catalonia generates 1,270 MW of wind power and 276 MW of solar power.

The target for 2050 is even more ambitious and aims at a 100% renewable energy share. This is a distant goal that will have to be negotiated with the Spanish state, which is responsible for nuclear energy and therefore for Catalan nuclear power plants.

The current Decree 16/2019 includes the following measures, among others, to achieve the objectives set out in the Climate Protection Act: In order to introduce a uniform procedure for faster processing and simplified implementation and erection of wind farms and photovoltaic plants (including environmental, construction, energy, spatial, landscape and asset analyses), the Urban Development Act will be amended. This change also affects installations for own production in buildings and public spaces. When installing photovoltaic systems for own consumption, a building permit is not required; it is sufficient to notify the city administration in advance. In addition, size restrictions per hectare will be lifted for photovoltaic parks.

The Congress of Deputies approved Decree-Law 17/2019, updated the profitability to 7. 09% and guaranteed 7. 389% for plants built before Decree 9/2003.

The new decree 17/2019 of 22. November, which adopts emergency measures for the necessary adjustment of the tariff parameters for the electricity network and responds to the process of stopping the activity of thermal generation plants, was approved. The new applicable legislation updates the fair value return on renewable energy production for the period from 01. 01. 2020 to 31. 12. 2025 (second regulatory period of 6 years). In this context, an appropriate fee was set at 7. 09% for the period mentioned above for the facilities that were put into operation after Decree 9/2013.

On the other hand, a reasonable rate of return of 7. 398% is maintained for installations commissioned before Decree 9/2013, provided that the energy producers make use of the concessions laid down and that they are prepared to continue or initiate new arbitration procedures and to pay any compensation or indemnification up to 30 June 2010. September 2020. This guarantees economic security for the plants, so that a reasonable profitability of 7. 398% is achieved, which is far above the 7. 09% for the period 2020 – 2025.

The current measures were approved despite abstentions by the PP and VOX and are intended to reduce the compensation demanded by the Spanish state in arbitration proceedings. The Spanish Government does not expect this to have any financial impact on final consumers.