Legal briefing

Aproval of the Order updating the remuneration parameters for renewable energy generation facilities with a specific remuneration regime

02/03/2020

The BOE of 28 February 2020 published Order TED/171/2020, of 24 February, updating the standard-facility remuneration parameters applicable to certain facilities that produce electricity from renewable energy sources.

The Order has been approved by the Ministry for the Ecological Transition and the Demographic Challenge (the “Ministry“) pursuant to the provisions of Article 14.4 of Law 24/2013, of 26 December, on the Electricity Sector (the “Electricity Sector Law“) and Article 20 of Royal Decree 413/2014 of 6 June, which regulates the activity of producing electricity from renewable energy sources, cogeneration and waste (“RD 413/2014“). Both regulations provide (i) that at the end of each regulatory period, which will last for six years, the remuneration parameters of the standard facilities may be reviewed, except as regards the regulatory lifespan and the standard value of the initial investment; (ii) that at the end of each regulatory half-period, which will last for three years, the estimates of income from the sale of energy will be reviewed for the rest of the regulatory period, by order of the Ministry; (iii) that the operating remuneration for standard facilities whose operating costs depend essentially on the price of fuel will be reviewed at least annually.

This Order completes the process of reviewing the parameters for the second regulatory period. This process began following the approval of Royal Decree Law 17/2019, of 22 November, adopting urgent measures for the necessary adaptation of remuneration parameters that affect the electrical system and providing a response regarding the process of cessation of activity of thermal power stations (“RDL 17/2019“). This regulation established the value of reasonable profitability for renewable facilities that are entitled to receive regulated remuneration.

As a general rule, the applicable reasonable rate of return to be used to review and update the remuneration parameters of the standard facilities, during the regulatory period between 2020 and 2025, is 7.09%. As an exception, for the facilities that had the status of premium remuneration when Royal Decree Law 9/2013, of 12 July (“RDL 9/2013”) entered into force, the reasonable rate of return will be 7.389% during the period between 2020 and 2031, provided that the requirements established in the third final provision bis of the Electricity Sector Law are verified.

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