LIVEBLOG on the New Royal Decree on Renewables

Today, 6th June, the Royal Decree on Renewable Energies has been approved. 

The summary of the reasons: 

Important problems: 

-From the start of 2004 and today the price of electricity has increased more than 70% and the offset amounts to 29 bn euro: the so-called tariff deficit.

The argument of always, we blame renewables. He does not complement his argument with the savings that have resulted from renewables, or the higher cost that would have supposed to generate electricity from other sources. 

The previous system is presented as system leading to a direct collapse of the system, another falsehood. 

He also talks about the fair return, a generic concept of the previous Law on The Electricity Sector, used by the Supreme Court and jumps to the conclusion that the Supreme has endorsed the reform presented. 

He continues his speech with a technical description of the new electric system remarking that it should have taken effect almost a year ago.

Finally he says that the level of reasonable return is around 5.8% right now. My Review: Truly outrageous. 

He continues insisting with the idea that the consumer pays for all of this. It is manipulative to reflect it that way if the economic savings involving this support scheme is not contrasted. The interested reader can consult this link APPA report thereon. 

Soria is bundled with renewable profitability. He says it will charge 5.8%, but we want to remember that a Royal Decree cannot modify a Royal Decree-Law and that RD-L 9/2013 makes clear that the reference is the last 10 years from the adoption of the RDL 9/2013, not from the Royal Decree on Renewables. 

Soria says that in 2014 there will be no deficit in the electricity system. In a few months we will check it out.

Let's not forget that the Additional Provision of Royal Decree Law 9/2013 says: 

"First additional provision. reasonable return of the production  installations applying the support scheme.

For the purposes of the provisions of the penultimate paragraph of Article 30.4 of the Law 54/1997 of November 27, for those installations that on the date of entry into force of this Legislative Decree actual present were entitled of a support scheme, the reasonable return will be, before taxes, on the average yield in the secondary market ten years prior to the entry into force of this Royal decree of Government Obligations to ten years increased by 300 basis points, all, subject to the review provided in the last paragraph of that article. "

 Today, 6th June, The Royal Decree on Renewable Energies has been approved. 

The summary of the reasons: 

 Important problems: 

 -From the start of 2004 and today the price of electricity has increased more than 70% and the offset of 29,189 euros: the so-called tariff deficit.

The argument of always, we blame renewables. He does not complement his argument with the savings that have resulted from renewables, or the higher cost that would have supposed to generate electricity from other sources. 

The previous system is presented as system leading to a direct collapse of the system, another falsehood. 

He also talks about the fair return, a generic concept of the previous Law on The Electricity Sector, used by the Supreme Court and jumps to the conclusion that the Supreme has endorsed the reform presented. 

He continues his speech with a technical description of the new electric system remarking that it should have taken effect almost a year ago.

Finally he says that the level of reasonable return is around 5.8% right now. My Review: Truly outrageous. 

He continues insisting with the idea that the consumer pays for all of this. It is manipulative to reflect it that way if the economic savings involving this support scheme is not contrasted. The interested reader can consult this link APPA report thereon. 

Soria is bundled with renewable profitability. He says it will charge 5.8%, but we want to remember that a Royal Decree cannot modify a Royal Decree-Law and that RD-L 9/2013 makes clear that the reference is the last 10 years from the adoption of the RDL 9/2013, not from the Royal Decree on Renewables. 

Soria says that in 2014 there will be no deficit in the electricity system. In a few months we will check it out.

Let's not forget that the Additional Provision of Royal Decree Law 9/2013 says: 

"First additional provision. reasonable return of the production  installations applying the support scheme.

For the purposes of the provisions of the penultimate paragraph of Article 30.4 of the Law 54/1997 of November 27, for those installations that on the date of entry into force of this Legislative Decree actual present were entitled of a support scheme, the reasonable return will be, before taxes, on the average yield in the secondary market ten years prior to the entry into force of this Royal decree of Government Obligations to ten years increased by 300 basis points, all, subject to the review provided in the last paragraph of that article. 

This is the draft of the Royal Decree which was published last week, you can download it here:

 Proyecto de Real Decreto por el que se regula la actividad de producción de energía eléctrica a partir de fuentes de energía renovables. cogeneración y residuos

We leave you today’s summary of the The Council of Ministers, in regards to renewables:

News

In the scope of application of the norm are included all renewable, cogeneration and waste installations regardless of their installed capacity. Is eliminated, thus the previous separation between the special regime and the ordinary regime.

They will only perceive the feed in tariff, "specific compensation" those facilities for which the market price is not sufficient to achieve a reasonable return linked to the risk level of the activity and with reference to an efficient and well-managed company.

The main novelty is that it abandons the purely variable remuneration that has been used to date (premium and feed-in-tariffs) for a similar scheme to other regulated activities that it reflects more accurately the actual cost structure of the activity, where some are fixed (investment, operation and fixed maintenance) and other purely variable (fuel, operation and variable maintenance).

Installations 

The new compensation scheme will apply on both existing and new installations.

For new installations, the granting of specific remuneration shall be established by competition processes which will conform to the principles of transparency, objectivity and non-discrimination. By Royal Decree specific technologies that may participate in the mechanism of competitive bidding shall be determined and, by Ministerial Order, subsequently fixed compensation parameters corresponding to type facilities.

Existing facilities that have enetered in the support scheme also will receive this new specific remuneration.

Non-penninsular territories

In non-peninsular territories, where the cost of conventional generation is much higher than in the mainland electricity system, to the point that is lower the cost of generation of photovoltaic and wind than the cost to conventional thermal technologies, iit will be granted an investment incentive for reducing generation costs (additional fee).

Revisions

The legislation also establishes the conditions for the revision of the different compensation parameters. These may only be amended, as appropriate, every six years, every three or annually. The standard value of the initial investment and the regulatory life remain unchanged once recognized each type installation.

Track of specific remuneration will serve as a tool for the execution and proper monitoring of such remuneration is created.

Depreciation of remuneration

The CNMC believes that implementation of the new compensation parameters can lead to a loss of about 1,7 bn euros of the specific remuneration received in 2014 by all renewable facilities, cogeneration and waste.

With the new system, facilities will receive until the end of its useful life around 140 bn euros of additional income obtained by as market remuneration.