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Energy and Regulation Forum

The FIDE Energy Energy and Regulation Forum is a high-level multidisciplinary forum for monitoring and debating current regulatory affairs in the energy sector from the legal, economic and technical perspectives, bringing together qualified professionals from the sector who develop their activity both in the public and private spheres and in academia. 

Hermenegildo Altozano

Director.
Partner responsible for the energy and natural resources practice of Bird & Bird's Madrid office. He has previously been a partner at Hogan Lovells and Eversheds Lupicinio. Between 94-96 he worked for the Houston (Texas) law firm Bracewell & Patterson. Member of the Academic Council of FIDE.

Mariano Bacigalupo Saggese

Director.
University Professor, Department of Administrative Law, UNED Law School. Counselor, National Markets and Competition Commission (CNMC). Member of the Academic Council of FIDE.

Luis Miguel Palancar

Director.
Responsible for Structured & Project Finance for Europe and Asia at BBVA Corporate & Investment Banking, leading financial advisory operations and structuring financing for projects and acquisitions. Member of the Academic Council of FIDE.

Publications

Discover all the publications, session summaries and other documents related to the activity of this forum:

13 November 2019

  • Francisco Espinosa, Managing Partner, Association of Electricity Consumers, (ACE)
  • Pedro Gonzalez, Director of Regulation, AELEC
  • Jorge Morales de Labra, Managing Director, Próxima Energía (GeoAtlanter)

 

Moderator: Íñigo del Guayo, Professor of Administrative Law, University of Almería

Your Order

The energy system evolves in accordance with the principles of decarbonization, digitization and decentralization. We are heading towards a completely new electrical system. The implementation of these principles will give consumers a new and central role in the system. To achieve these objectives, networks are an essential instrument, also because they constitute platforms for conducting new businesses. All economic regulation must be predictable and stable and must respect legal certainty. These demands have a maximum character at the core of the regulation, which is the design and implementation of the remuneration frameworks. Given the complexity of the new energy technology system, regulation must try to adapt. Adequate compensation for the networks is essential for the necessary investment to be carried out, without which the ambitious objectives established in the integrated Spanish National Energy and Climate Plan will not be achieved. These are objectives that also exceed the average of the commitments made by other States of the European Union. If there is no investment in the networks, it will be difficult for generation through renewable energies, intermittent and unmanageable, to be integrated into the system. The automation of networks implies the management of bidirectional flows and the management of demand, something unattainable without sufficient investment in innovation. It must be recognized that the implementation of smart grids does not necessarily mean lower network costs. The gas transition also requires adequate compensation for network activities, not only because the role that gas plays in the electricity system, as a cleaner and safer (manageable) source, but because the transition to renewable gases itself requires a lot of investment in technological innovation. In the energy transition, it is necessary to govern so that all sectors and all the subjects involved work in the same direction. The transition will be a failure if one of the agents of the energy sector (on the supply or demand side) is left out of the process –directly or indirectly-. The transition requires an enormous amount of investment and the companies subject to economic regulation obtain their remuneration from a public decision. The determination of the remuneration of the networks through the setting of tolls was entrusted at the beginning of 2019 to the National Commission of Markets and Competition, which published a few months ago some drafts of Circulars. This circumstance is an opportunity to establish clear and transparent methodologies and to develop a healthy regulatory culture that involves regulators and regulators in a continuous dialogue. The Spanish institutional system has some frameworks for discussion that must be expanded and perfected. The allegations presented by the interested parties to the draft Circulars are currently being studied.

7 2020 September

Speakers:

  • Joan Groizard, IDEA General Director
  • Rocío Sicre, Country Manager Spain at EDP

Moderator: Hermenegildo Altozano,Partner of Bird & Bird. Member of the Academic Council of Fide

Your Order

The energy sector and the country as a whole are at a key moment, both due to the international and European regulatory framework in the field of energy and the fight against climate change, with the objective of climate neutrality on the table by 2050, as well as the Need to activate in the short term an economic reconstruction process that, according to the evidence, should be based on “green” investments if it seeks to maximize the return on activity and employment in the short term, while generating activity compatible with medium-term objectives long term.

In turn, renewable energies have seen a huge technological evolution in recent years, which in the case of mature technologies allows these to be the cheapest way to generate electricity. To guarantee investment in renewables in a market not designed, a priori, for technologies with high initial investment and low operating costs such as renewables, a framework is necessary that provides predictability in income and certainty in the medium term.

Therefore, a new auction framework that allows consumers to anticipate the savings in the energy bill derived from the costs of modern renewables, that incorporates various control mechanisms to ensure adequate competition, minimize the behaviors that distort the market and that also seeks to take advantage of the potential tractor effect over the entire industrial value chain that renewables represent in our country.

In any case, the Economic Regime for Renewable Energies is still in the regulatory development phase, so the mandatory reports and contributions from the different sectors may introduce improvements and nuances to what has been described.

Next, Rocío Sicre makes a presentation on the economic impact of renewable energies, and on the PNIEC, according to which a total installed power in the electricity sector of 2030 GW is expected by 161, of which 50 GW will be wind energy; 39 GW solar photovoltaic; 27 GW combined gas cycles; 16 GW hydraulic; 9,5 GW pumping; 7 GW solar thermoelectric; and 3 GW nuclear, in addition to 2.5 GW of storage, which will allow reaching 74% renewable generation.

El cost of renewables Today (in terms of LCOE) it is the lowest of all generation alternatives and it is expected that both technologies will continue to lower their costs. As a result, from a consumer point of view, integrating renewables would allow for a lower cost of electricity. This is especially relevant for large consumers, as it could help lower their electricity bill, while reducing their carbon footprint. In this way, renewables contribute to improving the competitiveness of the industries established in Spain versus other countries and, ultimately, attracting new industrial investments or avoiding the leakage of existing ones.

However, for this to be fulfilled, it is necessary that renewables have a stable regulatory and income framework:

  • On the one hand, there must be a auction calendar with sufficient visibility. RDL 23/2020 establishes the bases for auctions, which is very positive for the sector, but it is essential that we also have a calendar that allows both manufacturers to plan their production chain and developers their portfolio of projects.
  • Moreover, the remuneration scheme granted must allow to have visibility on the income (a CfD, as recommended by the guidelines European, it is preferable). In this way, good financing conditions can be accessed that result in a lower price and therefore greater savings for consumers.

Furthermore, renewables contribute significantly to the economy. According to the latest PREPA yearbook, wind power in Spain contributes to 0.3% of GDP with € 3,584 million and 24,000 people employed, being the third largest exporting country in the world, only behind Denmark and Germany. With the wind installations expected between now and the end of the decade, not only in Spain but also in the rest of Europe, almost 130 GW according to national plans, the wind sector will be able to continue contributing to economic development. It should also be noted that, in the current economic situation, wind power and renewables in general, due to their short construction times, if they have the appropriate regulatory framework (access and connection, auctions, etc.) can contribute substantially to the reactivation of the economy.

In addition, the integration of RES at the levels defined in the PNIEC makes it necessary to develop other technologies (batteries, hydrogen, etc.) that are still in a more premature phase but that could represent a new industrial sector as we see wind power today.

3 November 2020

Speakers:

  • Jaime Almenar, Partner in the Public Law area of ​​Clifford Chance

  • Pedro Gonzalez Gonzalez, Director of Regulation of AELEC.

Moderator: Mariano bacigalupo, Professor of Administrative Law (UNED), member of the Board of Appeal of the European Agency for the Cooperation of Energy Regulators (ACER) and member of the Academic Council of Fide

Your Order

Jaime Almenar opened the debate, alluding to the forthcoming approval of the regulations for the development of article 33 of the LSE by means of a Royal Decree and a Circular from the CNMC, which does not yet contemplate the development of the access and connection regime for consumers and distributors.

The main ideas of the normative projects in process are:

  1. Se unify access and connection permissions in a single procedure, which will be requested jointly from the manager of the network to which the installation is to be connected.
  2. Also simplified and clarified procedures for the concession access and connection, while reducing the terms for its granting.
  3. Se consolidates the criterion of temporal priority for the ordering of access requests, when it comes to requests submitted on different days, but important exceptions are introduced. Thus, applications submitted on the same day will not be ordered based on the time of submission of the application and its complete attached documentation, but based on the date of submission to the competent Administration of the receipt certifying the constitution of the guarantee. . Also as an exception to the principle of temporal priority, the Ministry for the Ecological Transition reserves the right to call discretionary contests for the granting of the new access capacity, when surplus access capacity appears in a node. Likewise, and to favor the hybridization of the facilities that already have access permits, they are authorized to use the same connection, provided that they meet certain requirements, without requesting new access. Finally, a second chance for access permits granted before the 2013 Electricity Sector Law, when they have not been able to have the start-up act before August 21, in exchange for meeting quite burdensome requirements. This second opportunity will allow the owners of these facilities to obtain new access without submitting to the rule of temporal priority.
  4. Se Suppresses the figure of the Single Interlocutor of the Knot, although it will remain temporarily in those nodes where it already exists.
  5. Se regulate compensation agreements for the compensation for the new users of the cost of the infrastructures necessary for the effectiveness of the connection to the network.

Then Pedro Gonzalez makes a presentation about how the PNIEC introduces in its objectives all the paradigm shifts facing the sector.

The importance of access and connection to electrical networks is fully motivated by the important challenges facing the electricity sector, with ambitious objectives already to 2030, which will consolidate the transformations that are going to take place; with a mainly renewable generation that can be hybridized between technologies, combining storage elements, and with some most active consumers that they will no longer be just consumers, which will complicate the management of the networks notably by having to manage variable capacities in generation and consumption, especially in the distribution network.

Therefore, the regulation on access and connection has the challenge of maximize the integration of renewables, ensuring supply at all times, and introducing rationality in requests due to the large accumulation existing to date. The draft Royal Decree and the Circular proposal make up the regulatory framework that advances in the simplification of the procedure, but that has some aspects that can be modified - subject to comments by aelēc - such as the possibility of applications being accepted under network reinforcement conditions, the need to reduce uncertainty about temporary restrictions on access or in capacity competitions, or to rationalize deadlines adaptation of systems and web portals or processing of requests. In addition, it is necessary to determine a capacity calculation procedure for the distribution network that adjusts to the specificities of the network.

January 21 2020

Speakers:

  • Ismael Bahillo, Deputy Director of Economic-Financial Regulation and Regulated Prices, National Commission of Markets and Competition

  • Luis Blanco, ACCIONA's Commercial Director of Energy Management.

Moderator: Hermenegildo Altozano, Partner of Bird & Bird and member of the Academic Council of Fide.

Your Order

The session was about the protection of the energy consumer: changes of marketer and electronic invoice and Ismael Bahillo intervened first, describing the regulatory framework on energy consumer protection both at the level of consumer regulations, as sectoral regulations or directives of the internal market for electricity and gas.

He then analyzed the main results in terms of change of marketer both in the electricity sector and in the gas sector: aggregate marketer exchange rates and by market segment; mean times of activation of the change; changes between regulated tariff and prices freely agreed with the marketer; loyalty between regulated and free marketers of the same business group; loyalty between the distributor and marketers of the same business group, etc. It also includes the most outstanding aspects and the regulatory proposals made by the CNMC in its recent Electricity Retail Market Supervision Report.

The speaker continues to show the vision that consumers have about the energy sector through the opinions expressed by the main consumer associations, the results of the household panel prepared by the CNMC or internationally, the “Consumer's Market Scoreboard” of the European Commission. Also at the international level, reference is made to the Vision 2030 for the energy consumer of the Council of European Energy Regulators (CEER) and the European consumer organization (BEUC).

This first presentation concludes that the European framework established first through the Clean Energy Package in 2019 and later, with the European Green Deal of 2020, marks some very ambitious targets in the share of renewables, emission reductions and efficiency improvements, in order to achieve a climate-neutral European Union by 2050. The energy transition that this implies must be achieved with the involvement and commitment of an active and educated consumer.

Then Louis white raises some key points about the long road traveled since 1998 in marketing competition, such as: 
  • In 2020, 22% of electrical energy is no longer sold by any "incumbent" company.
  • In 2020, 2,9 million customers no longer buy energy from any "incumbent" company.
  • The success has been of all, of the different governments and of all the agents.
Regarding the measures aimed at promote competition in energy trading, the rapporteur raises some key points in relation to different aspects.
  1. IAE heading for commercialization:
  • Until a month ago, the electricity and gas traders received endless requests from the different municipalities, requiring payment of the IAE.
  • It causes that in certain areas the commercialization is not profitable (1-2 clients and payment of € 300-400).
  • Since 2021 there is a specific national heading for the commercialization of energy.
  • In this way there will no longer be a tax advantage for the big ones to sell in many municipalities.
 
  1. Analysis of the Internal Market Directive 944/2019.
  • The directive indicates that as of January 2021 there will be no regulated rates for SMEs and large companies. With current regulations, this requirement is not fulfilled.
  • It is proposed limit the voluntary rate for the small consumer exclusively to domestic customers, excluding companies.
  • The directive indicates that they should be taken measures to phase out existing regulated tariffs (Except for consumers in a situation of energy poverty).
  • The progressive lowering of the power limit for access to regulated tariffs as of 31/12/2020, going from 10 kW to 5 kW.
  • The directive indicates that if there are still regulated rates as of 31/12/2020, they must have a price above cost and that allows free competition. For this reason, adapt the PVPC rate as of 1/12/2020 at the actual cost of active fundraising.
 
  1. Promotion of the digital invoice.
  • European legislation advances in favor of digitization, the improvement of productivity, sustainability and the environment, Spanish regulation is not uniform in its perception, assessment and treatment of the use of digital invoices.
  • In this sense, Spanish legislation may contradict consumer regulations for two reasons:
  1. The General Law for the Defense of Consumers and Users requires express consent from the end customer.
  2. The European regulations on VAT, interpreted by the Ministry of Finance, indicate that the consumer must give their informed consent, but expressly or tacitly.
  • Clearly, the possibility of a tacit acceptance would simplify procedures and help to achieve European objectives mentioned above, in addition to incorporating some obvious advantages, such as:
    • Contribute to the modernization and digitization of the economy.
    • Benefits for the environment and economic savings.
    • It also reduces the use of paper, ink and fuel in its transport.
    • Facilitates the fight against fraud.
 

Academic coordination: Emilia malacalza

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