Projects

General government authorisation

What government authorisations must investors or owners obtain prior to constructing or directly or indirectly transferring or acquiring a renewable energy project?

As per the provisions of article 111 in conjunction with article 115 of Royal Decree 1955/2000, the construction, expansion, modification and operation of all electricity installations requires the following administrative authorisations:

  • administrative authorisation in relation to the preliminary draft of the installation as a technical document to be processed; if appropriate, in conjunction with the environmental impact study;
  • approval of the execution plan; and
  • start-up certificate, which permits the commencement of commercial exploitation once the plan has been executed. The request of the start-up certificate must be accompanied by a final works certificate signed by a competent technical expert, stating that the installation has been implemented in accordance with the specifications contained in the approved execution plan as well as with the requirements of applicable technical regulations. The relevant authorities issue the start-up certificate within a period of one month from receipt of the request, having completed the necessary technical inspections and verifications of the project.

It is also necessary to obtain a facility transmission authorisation for the direct transfer of any renewable project. The party intending to acquire ownership of the facility must submit the request for such authorisation to the MITECO.

The application must be accompanied by documentation to prove the legal, technical and economic capacity of the applicant, as well as a statement from the owner of the facility expressing its will to transfer ownership.

Upon approval, the applicant will have a term of six months to transmit ownership of the facility. The authorisation will expire after this period. The applicant must notify the MITECO of the effectiveness of the transfer within one month of it becoming effective.

For projects authorised by a given autonomous community, their corresponding administrative bodies must issue the authorisation for the transfer of the facility. If a given autonomous community has not enacted any specific legislation in this regard, Royal Decree 1955/2000 will also apply in that autonomous community.

Royal Decree 1955/2000 does not establish the need for an authorisation for an indirect transfer (eg, by selling shares of the project company) of a renewable facility. However, several autonomous communities (eg, Catalonia, Castilla-León) have also enacted legislation that establishes a requirement to obtain authorisation for both direct and indirect transfers of facilities.

Offtake arrangements

What type of offtake arrangements are available and typically used for utility-scale renewables projects?

Operators can resort to offtake arrangements to mitigate the risks of price volatility of the wholesale market. The main arrangements in the Spanish market are forward market organised contracts, bilateral physical contracts and OTC agreements such as contracts for difference.

In Spain, the forward market is managed by OMIP (the clearing house). OMIP has standardised energy values for the contracts according to delivery period (days, weeks, months, quarters, years (up to four years)).

This is a generally available resource for offtakers in relation to the energy acquired on the wholesale market and there is no specificity in relation to renewable energy.

Procurement of offtaker agreements

How are long-term power purchase agreements procured by the offtakers in your jurisdiction? Are they the subject of feed-in tariffs, the subject of multi-project competitive tenders, or are they typically developed through the submission of unsolicited tenders?

Long-term PPAs are usually in the form of bilateral physical contracts or negotiated in the financial forward market.

Since forward market agreements have a maximum term of four years, these schemes do not address risks after the fourth year and are also subject to regulatory uncertainties. In Spain, an offtake arrangement usually has a term of one or two years and it has not been common for offtakers to execute long-term PPAs.

These schemes have not been so common in Spain as in other countries, particularly considering that renewable energy projects have been subject to the economic incentives scheme already explained, and the electricity they generate has to be sold on the wholesale market. However, given the maturity of renewable technologies and the profitability of many new projects without the need for regulated incentives, long-term PPA schemes are beginning to be executed in the market (eg, Forestalia has recently executed a 300MW wind energy PPA). PPA schemes will provide more certainty to investors, on the one hand because they eliminate eventual fluctuation of electricity prices at the pool, and on the other hand since it could allow for the bankability of certain renewable projects.

Operational authorisation

What government authorisations are required to operate a renewable energy project and sell electricity from renewable energy projects?

See question 24.

Decommissioning

Are there legal requirements for the decommissioning of renewable energy projects? Must these requirements be funded by a sinking fund or through other credit enhancements during the operational phase of a renewable energy project?

The owner of the generation facility has the obligation of dismantling the facility after its definitive closure. A breach of this obligation may lead to the authorities dismantling the plant at the owner’s expense.

According to the provisions of articles 135 et seq of Royal Decree 1955/2000, the owner of the facility must request administrative authorisation of closure before the MITECO or the competent body of the autonomous community. The request must enclose a closure plan, which shall contain at least one report detailing the technical, economic and environmental circumstances of the facilities for which closure is sought. Likewise, the plan must include up-to-date blueprints of the facility.

It can be stated in general that there will be no credit enhancements or sinking fund guarantees to be made during the operational phase of the renewable project, given that Royal Decree 1955/2000 does not establish any financial requirements or guarantees for the decommissioning. However, there might be provisions in the relevant administrative authorisation, and regulations from autonomous communities (eg, solar PV installation in Andalusia) that may specify guarantees for dismantling if deemed appropriate.