Energy Spain Newsflash January 2023

Changes in the Electricity Sector

COUNCIL REGULATION (EU) 2022/2577 OF 22 DECEMBER 2022 LAYING DOWN A FRAMEWORK TO ACCELERATE THE DEPLOYMENT OF RENEWABLE ENERGIES

Council Regulation (EU) 2022/2577 of 22 December 2022 laying down a framework to accelerate the deployment of renewable energies (Regulation (EU) 2022/2577) sets out a common regulatory framework applicable to administrative procedures for obtaining permits in European Union member states. The scope of Regulation (EU) 2022/2577 is limited to the following procedures:

• permit-granting processes started within 18 months after 29 December 2022, without prejudice to its discretionary retroactive application by Member States to ongoing permit granting processes.
• all relevant administrative permits issued to build, repower and operate plants for the production of energy from renewable sources including heat pumps, co-located energy storage facilities, and assets necessary for their connection to the grid, including grid connection permits and environmental impact assessments where those are required. In said processes, Regulation (EU) 2022/2577 will apply to all administrative stages starting from the acknowledgment of the reception of the complete application by the relevant authority and ending with the notification of the final decision on the outcome of the process by the relevant authority.

Permit-granting processes for the installation of photovoltaic and solar thermal energy equipment

• The permit-granting processes for the installation of solar equipment and associated infrastructures, excluding those located on the surface of artificial water bodies, provided that the main purpose of such structures is not the production of solar energy (i) shall not exceed three (3) months, and (ii) shall be exempted from the environmental impact assessment procedure. Notwithstanding the foregoing, Member States may exempt certain areas for the protection of cultural or historical heritage or defence and national security interests.
• the absence of a reply or decision by the competent authorities within one (1) month following the submission of the application of a permit for solar energy equipment, with a capacity equal to or less than 50 kW, shall result in the permit being considered as granted, provided that there is enough capacity to connect such facility to the distribution grid.

Authorisation for the repowering of renewable energy production facilities.

• Processes for the repowering of projects shall not exceed six (6) months, including any mandatory environmental impact assessment. If the repowering does not result in an increase of more than 15% of the capacity of the installation, grid connections shall be permitted within three (3) months following application, unless justified safety reasons or technical incompatibilities.
• When an environmental impact assessment procedure is mandatory for these projects, said assessment shall be limited to the possible significant impacts arising from the modification or extension of capacity and shall not apply when there is no need to use additional space and the repowering complies with the original environmental measures.

Member States are also authorised to waive the requirement for an environmental impact statement in authorisations for renewable energy projects and their grid infrastructure when such projects are located in areas aimed at the deployment of renewable energy and provided that such areas have been subject to a prior strategic environmental assessment.

Further information on Regulation (EU) 2022/2577 is available at the following link.

MEASURES INTRODUCED BY ROYAL DECREE-LAW 20/2022, OF 27 DECEMBER, ON MEASURES IN RESPONSE TO THE ECONOMIC AND SOCIAL CONSEQUENCES OF THE WAR IN UKRAINE AND SUPPORT FOR THE RECONSTRUCTION OF THE ISLAND OF LA PALMA AND OTHER SITUATIONS OF VULNERABILITY (RDL 20/2022)

Suspension of authorisation processes for nodes where an access capacity tender (concurso de capacidad de acceso) has been called.

Until 28 June 2024, the permit-granting processes initiated through any of the following requests will be suspended: (i) deposit of the grid guarantee; (ii) filling of applications for administrative authorisations; and (iii) filling of applications for environmental assessment.

However, the abovementioned suspension shall not apply to those projects that:

• have submitted a request for an access and connection permit under the 10% capacity reserve, intended for applications that meet the requirements set out in Article 8 of Royal Decree-Law 6/2022, of 29 March (RDL 6/2022);
• consist of hybridisations of previous installations and comply with the provisions of Article 27 of Royal Decree 1183/2020, of 29 December;
• administrative authorisation requests related to projects which have already obtained access and connection permits; or
• have submitted their request prior to the decision that an access capacity tender shall be held at that specific node, provided that the request has not been denied or rejected by the system operator.

Royal Decree 244/2019, of 5 April, which regulates the administrative, technical and economic conditions for electricity self-consumption, is amended so that those generation facilities that exclusively use photovoltaic technology and are located entirely on the roof of one or several buildings, on industrial land or on existing or future artificial structures whose main purpose is not the generation of electricity; such facilities may be considered as proximity and grid-associated facilities (instalación de producción próxima a las de consumo y asociada a través de la red) for the purposes of the self-consumption regime, provided that they are located at a distance of less than 2,000 metres from the energy consumer.

Simplification of permit-granting procedures for renewable energy production facilities required to be authorised by national authorities (Administración General del Estado).

• Environmental affection procedure (procedimiento de afección ambiental). This procedure will replace the ordinary environmental assessment procedure for those renewable energy production facilities projects that submit commence their administrative processing between 28 December 2022 and 31 December 2024. Said procedure will not be applicable to projects located in areas within the Natura 2000 Network (Red Natura 2000), protected natural areas, marine environments; or when such projects involve the construction of overhead power lines with a voltage equal to or greater than 220 kV and a length of more than 15 km.
  
  (i) To this effect, the relevant environmental body must issue an environmental affection report within a maximum period of two (2) months following the reception of the required documentation, stating whether the project may continue with the corresponding permit-granting process or whether the project shall be subject to ordinary environmental assessment procedures.
  
  (ii) The environmental affection report may also impose certain requirements deemed appropriate to mitigate or compensate potential environmental impacts as well as the conditions and plans for monitoring and supervising the implementation of the project.
  
  (iii) The environmental affection report will expire if the project is not authorised within two (2) years of its notification to the developer. RDL 20/2022 establishes that the environmental impact report shall have the same effects as the environmental impact statement regarding the fulfilment of the milestones set forth in article 1 of Royal Decree-Law 23/2020, of 23 June.
• Simplified authorisation process for renewable energy production facilities.

RDL 20/2022 introduces provisions that amend the administrative authorisation procedure set out in Royal Decree 1955/2000, of 1 December (RD 1955/2000) for projects that have obtained a favourable environmental affection report and whose authorisation request is submitted between 28 December 2022 and 31 December 2024.

• Prior administrative authorisation and construction authorisation will be processed jointly and the public information procedure will be carried out simultaneously with the administrative processing of both authorisations, reducing the current deadlines by half.
• The ordinary deadlines for procedures concerning the submission of the information related to the execution project to affected Administrations, public bodies or, where appropriate, public service companies or general interest services companies are also reduced by half.
• Once the above stages have been completed, the competent authority responsible for processing the application will send the complete record (expediente), together with its report, to the Directorate General for Energy Policy and Mines (Dirección General de Política Energética y Minas) within fifteen days, for the purposes of its resolution.
• In the event that the declaration of public utility (declaración de utilidad pública) is requested, its request must be filed together with the applications for the prior and construction administrative authorisations.

Further information on RDL 20/2022 can be found at the following link.

Changes in the Hydrocarbon's Sector 

MEASURES INTRODUCED BY RDL 20/2022

Waste-to-energy facilities (instalaciones de valorización energética de residuos) to benefit from the gas price adjustment mechanism

RDL 20/2022 introduces the possibility for waste-to-energy generation facilities which partially use natural gas to generate electricity to benefit from the adjustment mechanism regulated in RDL 10/2022, of 13 May, during the time this adjustment mechanism remains in force.

Facilities seeking to benefit from such adjustment mechanism will have to first renounce to the specific remuneration regime in accordance with Royal Decree-Law 17/2022, of 20 September (RDL 17/2022). Further information on RDL 17/2022 can be found at the following link.

Estimation of the price of fuels for the updating of the operating remuneration

As from 1 January 2023, for the purposes of updating the operational remuneration (retribución a la operación) of the standard facilities (instalaciones tipo) whose operating costs depend essentially on the fuel price, the estimation of fuel prices will be carried out considering the half-yearly variations in the cost of raw materials and, where applicable, the access tolls provided for in Order IET/1345/2015, of 2 July, which establishes the methodology for updating the operating remuneration of facilities with a specific remuneration regime.

The abovementioned methodology for estimating the price of fuels shall be used until the order establishing the new methodology applicable to this type of facilities in accordance with RDL 6/2022 comes into force.

Further information on RDL 20/2022 can be found at the following link.

Tax Corner

RDL 20/2022 HAS INTRODUCED VARIOUS TAX MEASURES AFFECTING THE ENERGY SECTOR

RDL 20/2022 extends until 31 December 2023 the 5% Value Added Tax (VAT) rate on deliveries, imports and intra-Community acquisitions of:

• natural gas, briquettes, and pellets from biomass and firewood;
• electrical energy deliveries made to holders of electricity supply contracts, whose contracted power (fixed power term término fijo de potencia) is less than or equal to 10 kW, regardless of the voltage level of the supply and the type of contract, when the arithmetic average price of the daily market corresponding to the last calendar month prior to the last day of the billing period has exceeded 45 €/MWh;
• electrical energy made in favour of holders of electricity supply contracts who are recipients of the electricity social voucher (bono social de electricidad) and have been recognised as severely vulnerable or severely vulnerable and at risk of social exclusion.

The application of the 0.5% rate for Special Electricity Tax (IEE) is extended until 31 December 2023.

The temporary suspension of the Tax on the Value of Electricity Production (IVPEE) is extended until 31 December 2023.

LAW 38/2022, OF 27 DECEMBER, FOR THE ESTABLISHMENT OF TEMPORARY ENERGY LEVY AND LEVIES ON CREDIT INSTITUTIONS AND FINANCIAL CREDIT ESTABLISHMENTS AND WHICH CREATES THE TEMPORARY SOLIDARITY TAX ON LARGE FORTUNES, AND MODIFIES CERTAIN TAX REGULATIONS. (LEY 38/2022, DE 27 DE DICIEMBRE, PARA EL ESTABLECIMIENTO DE GRAVÁMENES TEMPORALES ENERGÉTICO Y DE ENTIDADES DE CRÉDITO Y ESTABLECIMIENTOS FINANCIEROS DE CRÉDITO Y POR LA QUE SE CREA EL IMPUESTO TEMPORAL DE SOLIDARIDAD DE LAS GRANDES FORTUNAS, Y SE MODIFICAN DETERMINADAS NORMAS TRIBUTARIAS.)

A new temporary levy (gravamen) is created in the form of a non-tax public patrimonial contribution. Its application is limited to fiscal years 2023 and 2024 (although it may be extended depending on its results).

• It shall apply to:
  
  (i) persons or entities that, in accordance with the resolutions of the CNMC, have acquired the legal status of main operator in the electricity, natural gas, fuel and liquefied petroleum gas (gases licuados del petróleo) sectors;
  
  (ii) persons or entities that engage in the production of crude oil or natural gas, coal mining or oil refining activities in Spain and which generate, in the year prior to the year in which the obligation to pay the benefit arises, at least 75 per cent of their turnover from economic activities in the fields of extraction, mining, oil refining or coking plant products (fabricación de productos de coquería).
• Those persons or entities in which any of the following circumstances concur, shall be exempt from levy:
  
  (i) The net turnover (Importe Neto de la Cifra de Negocios, INCN) for the fiscal year 2019 is less than EUR 1,000 million.
  
  (ii) The INCN for fiscal years 2017, 2018 and 2019, respectively, derived from the activity that would have determined its consideration as a main operator in an energy sector, does not exceed 50 per cent of the total net turnover for the respective year's turnover.
• In the case of taxation under the tax consolidation regime, the INCN will be that of the tax group.
• In the case of a commercial group made up of entities taxed in the common territory and entities taxed in the foral territory, the INCN shall be determined by taking into account the persons, entities and groups that have filed tax reports (declaraciones) in the common territory and those that have filed taxed reports in the foral territory.

The accrual date (devengo) is 1 January of each year and shall be paid within 20 calendar days of the month of September of the same.

The tax rate (cuota tributaria) will be equal to 1.2% of the INCN derived from the activity carried out in Spain in the calendar year prior to the accrual date. For the calculation of the INCN, the following will be excluded: (i) the Tax on Hydrocarbons; (ii) the Canary Islands Special Tax on Fuels Derived from Petroleum; (iii) the Complementary Taxes on Fuels and Oil-based Fuels in Ceuta and Melilla; (iv) the amount corresponding to regulated activities, understood as the supply at regulated prices (PVPC for electricity, TUR for gas, bottled GLP and piped GLP); (v) the regulated payments (ingresos regulados) derived from the transport and distribution networks for electricity and gas; and (vi) in the case of energy generation with facilities benefiting from specific remuneration regimes and additional remuneration in non-mainland territories, all revenues from the facilities, including those received from the market and economic dispatch (despacho económico) respectively.

An advance payment of 50% of the levy must be made within the first 20 days of February. The levy cannot be passed on (repercutirse) directly or indirectly to consumers. Neither the service nor the advance payment is tax deductible for Corporate Income Tax purposes.