In the face of the considerable challenges currently being met by the energy sector (Europe’s dependence on gas from Russia, the war in Ukraine, competition from large Chinese manufacturers, who have already introduced more than double the amount of photovoltaic solar panels which are actually needed) and the difficulties which both manufacturers and installers of solar photovoltaic systems, installations and components have to grapple with, it is necessary to implement solutions which entail new business and organisation models for reducing costs, such as auto-generation, auto-consumption and energy storage projects.
Since 2020, the Spanish legal system allows for the organisation of Energy Communities, in any of their forms, which enable environmental, financial and social benefits to be obtained through managed projects, which are being encouraged by the Spanish and European authorities.
On a European level, EU Directive 2018/2001 of the European Parliament and of the Council of 11thDecember, introduces the concept of the Renewable Energy Community (hereinafter, “REC”) while the EU Directive 2019/944 also of the European Parliament and of the Counsel of 5th June, introduces the Citizen Energy Community (hereinafter, “CEC”).
In Spain, on a national level, we may emphasise the following milestones:
- Law 24/2013, of 26th December on the Electricity Sector.
- Royal Decree 5/2023, of 28th June, for the Enforcement and Compliance with European Law, which contemplates the figures of REC and CEC.
- Draft Royal Decree 5/2023, of 20th April, pursuant to which the figures of REC and CEC are developed.
As for the concepts:
A) REC.
It is defined through the following elements:
1.- Its nature and guiding principles: “a legal entity based upon the open and voluntary, autonomous participation which is effectively controlled by partners or members”.
2.- Identity of its components: “whose partners or members are natural persons, SMEs or local authorities, including municipalities”.
3.- Location: “That they are situated in the proximity of the renewable energy projects which are the property of said legal entity and which have been developed by said entity”.
4.- Purpose of said projects: “the primary purpose is to deliver environmental, financial or social benefits to its partners or members, or to the local areas where they operate, instead of financial gains”.
B) CEC.
Is defined through the following elements:
- The nature and principles of action: “Legal entity based upon the voluntary and open participation, the effective control of which is exercised by partners or members”.
- The identity of its components: “Natural persons, local authorities, including municipalities, or small companies”.
- Objectives: “the principal objective consists of offering environmental, financial or social benefits to its members, partners or to the locality in which the activity is developed, rather than generating a financial profit”.
- Framework for action: the electricity sector.
Therefore both figures have their nature and their guiding principles in common, as well as the identity of their components and their objectives, even if they are different in their scope of action (renewable energy projects in REC versus projects within the electricity sector, in CEC) and in the requirement of the proximity of the members to the renewable energy projects in the REC.
With regard to the processing of the Draft Royal Decree 5/2023, the Spanish National Markets and Competition Commission (Comisión Nacional de los Mercados y la Competencia – CNMC) published a report on 31st October 2023 considering that the definition of some previsions requires greater specification, such as:
(i) the modality of the purchase and sale of energy (the procedure for the purchase and sale of energy particularly in REC must be defined);
(ii) the autonomy of the CEC;
(iii) the methodology of tolls (or access tariffs) and charges for ensuring that all consumers contribute in a proportional manner based upon the costs incurred;
(iv) the scope of the right of transfer and use, by REC, of a plant, which is property of a third party, for its operation;
(v) the rights and obligations of the CEC (participation in storage and the scope of their role when they act as distributors);
(vi) the requirement for an annual or biannual report for the Directorate General of Energy Policy and Mining which accredits the fulfilment of the established requirements and the destination of the financial benefits obtained by the REC and the CEC with their activity.
In conclusion, the specific regulation of these two figures implies a considerable advance in the development of Energy Communities and will involve an important saving for companies as well as for consumers.
Mireia Bosch
Vilá Abogados
For more information, please contact:
1st December 2023
