Policy Breakdown: Spain's new Royal Decree-law 23/2020

While the ongoing Coronavirus pandemic may have initially looked like stalling the implementation of the European Green New Deal just months after its presentation, the Spanish government has already taken measures to ensure the sustainable economy is at the center of the government’s recovery plan for the Spanish economy. In its Royal Decree-law (RDL) 23/2020, the government laid out a series of regulations designed not only to boost the Spanish renewables sector, but also to ensure its recent period of rapid growth continues unimpeded. Below are some key points about this new set of regulatory changes any investor in Spanish renewables should know:

  • The new set of regulatory changes can be divided into four main initiatives
    • First, the Spanish government has cut red tape in the renewables sector, weeded out speculative projects, and established a new system by which renewables projects will be auctioned.
    • Second, the RDL expands the set of business models now considered part of the renewables market (meaning these will have faster access to the national energy grid as well as be subject to renewables market regulation). The two new models to be included are energy storage projects and hybridization projects.
    • Third, the government will encourage energy efficiency by improving the flexibility of the National Fund for Energy Efficiency which, among other measures, will allow for smaller enterprises to temporarily delay repayment of loans to the fund, given they face pandemic-related constraints.
    • Fourth, the government has undertaken a series of reforms, most of them easing financial restraints for renewable projects, that will ensure investor activity does not slow throughout the current pandemic.
  • Through the RDL, the government also reinforced its commitment to enacting policies in accordance with both the EU’s Just Transition Fund and the European Directive on Renewable Energy. In other words, the new set of measures are directly aligned with those of the EU’s Green New Deal and its guidelines for national governments.
  • The new energy auction system (about which readers can learn more here) also reflects the government’s commitment to ensuring the future success of the renewables industry. The new model for auctions creates a stricter set of administrative demands, while also allowing companies unable to meet those demands within three months to forego their authorization. Through these demands, the government expects to weed out speculators, thereby leaving more space on the energy grid for non-speculative projects. 
  • Smaller renewable projects will also be able to use any surplus profits from higher rates of remuneration (as set by the government) to plug any financial gaps resulting from the pandemic. Simultaneously, the RDL also ensures that renewable energy distributors and transporters will receive further funding, allowing them to both digitize and innovate upon their current systems.
  • Ultimately, the new RDL is yet another marker of the new era in which we find the Spanish renewables market—one where the Spanish government, backed by the EU, is working to put renewables at the center of the Spanish economy.

 To learn more about the Spanish government’s renewables policies, contact us at [email protected].