Reforming the electricity sector – Watson, Farley & Williams

With the aim of controlling the electricity deficit and continuing the reform of the sector, the Council of Ministers has approved the Royal Decree which regulates the generation of electricity through renewable energy sources, cogeneration and waste (the “Royal Decree”).

This supersedes Royal Decree 661/2007, dated 25 May, which regulated the production of electricity under special regime, and Royal Decree 1578/2008, of 26 September, regarding the remuneration for the production of electricity using solar photovoltaic technology.

This new Royal Decree is aimed at progressing the reform of the electricity sector and derives from Royal Decree Law 9/2013, of 12 July, on Urgent Measures to guarantee the Financial Stability of the Electricity System (the “RD-Law 9/2013”).

This was the first in a series of measures introduced in order to control the deficit of the electric system and which had already foreseen the approval of this Royal Decree by virtue of which the remuneration system of the renewable, cogeneration and waste production facilities is modified and which is applicable since RD-Law 9/2013 came into force on 14 July 2013.

The new remuneration framework meets the criteria set forth in article 14 of the recently approved Law 24/2013, of 26 December, of the Electricity Sector and which shall be detailed by the Ministerial Order which is pending approval by the Minister of Industry, Energy and Tourism (the “Ministerial Order”). The Ministerial Order will define the revised bandings for remuneration of existing renewable, cogeneration and waste facilities.

The Ministerial Order is expected to be approved shortly.

María Pilar García Guijarro is a partner at Watson, Farley & Williams