CNMC hits REE by reducing need for network investments
-Reviewing the allocation of supply points reduces the number of tendencies to remunerate
– Oblige renewable promoters to meet milestones in order not to lose access to the grid
The Comisión Nacional de Mercados y Competencia (CNMC) is preparing a Circular to establish the methodology and conditions for access and connection to the transmission and distribution networks of electricity production facilities, which may represent a major setback for Red Eléctrica’s accounts in the coming years.
The idea that is being considered, given the existing legal problems, is to grant an extension of one year to all those who have one of these permits, mainly wind promoters, to allow them to move forward in the process with the aim of being able to clean later the access points granted to speed up the construction of renewables.
To this end, it is expected that the new regulations will maintain the level of guarantee required and include the requirement of some degree of firmness in the project (at least 100% of the land insured will be lowered). Subsequently, the intention is to require that in the 5 years available to connect the installation to the network, various intermediate milestones are produced which, if they are not reached, result in the loss of the access point and the guarantee.
The regulation will also establish the reasons for inadmissibility and, where appropriate, refusal, the content of applications, permits and contracts, as well as the obligations of publicity and transparency of the relevant information for access and connection, so as to avoid asymmetric information between companies and reduce the growing conflicts of access that are being brought before the CNMC against Red Eléctrica.
These changes will notably reduce the need for investment in networks, but in addition, as explained by José Donoso, general manager of Unef, Red Eléctrica currently uses a distribution criteria for supply points from the 80´s. If the access capacity were updated, it could be increased by 25%, which would further reduce the assets that the system has to remunerate and would halt the speculation that the system operator, Miguel Duvisón himself, has already warned about.
This revision, which is welcomed by the CNMC, would allow a strong reduction in the need for investment in transport networks, which would affect the accounts of the company chaired by Jordi Sevilla in the form of a lower fair return on the eve of the sharp fall expected from 2023 due to the end of the amortisation of a large number of assets but at the same time would facilitate the containment of tolls and, therefore, of the tariff paid by consumers.
Such a measure would put an end to speculation at the supply points that are already being paid at EUR 80 000.
The Spanish government together with Red Eléctrica have tolerated speculation in the renewables sector in recent years. The technical manager of the system handles requests to connect up to 150,425 MW of clean energy, an absolutely disparate amount for a country like Spain in which the current installed power is 105,000 MW and consumption is barely half, an average of 40,000 MW, meaning that there is already overcapacity.
The Energy and Climate Plan foresees the implementation of 67,500 MW of renewables until 2030, that is to say, less than half of the requests currently registered and even so it would allow a total installed power of 156,965 MW to be reached, which would be sufficient to cover demand, as calculated by the Ministry of Ecological Transition itself, and the requirements of the European Commission, but the truth is that not all of these requests have a real development project behind them.
The new generation will also be used to deal with the closures that the electricity plants will undertake in the next few years with the coal plants (9,213 MW) and the dismantling of the nuclear power plant between 2027 and 2035 (7,117 MW), as well as the hibernation requests for several combined cycles.
The Government multiplied by four the guarantees required to grant access and connection rights for new generation projects from 10 euros per kW of power of the future installation to 40 euros per kW, in order to avoid this speculation, but the only thing that was achieved, despite the warnings against the sector, was to increase the selling price of these knots for developers and increase the applications registered.
Other circulars
This measure is part of the first four circulars that the CNMC had to present on Thursday in order to draw up electricity and gas tariffs next December.
According to knowledgeable sources, for the time being only those corresponding to the gas sector have been approved (Circular establishing the natural gas balance rules and the Circular establishing the mechanisms for access and capacity allocation to be applied in the natural gas system). It is expected that the full content will not be made public until next week.
