The legal teams of the major energy companies on Thursday were ready to scrutinize the fine print of the omnibus royal decree published by the Official State Gazette (BOE) with the measures to deal with the economic and social consequences of the crisis. But the first look at the 150 pages of writing only throws a first conclusion. “There are no details”.
It will be necessary to wait until the general budgets of the State to know what are the deductions on investments in decarbonization that the big energy companies can apply and then they will calculate whether or not it is enough to compensate the amount of the tax on extraordinary profits and if, as the second vice-president, Yolanda Díaz, has criticized, “it is a fiscal gift”. Because, despite their claims, the central government maintains it and threatens to make it permanent after reform.
What the published royal decree does provide are arguments against the tax. “It is very complicated to make an assessment now, without knowing what can be deduced or how. But if there is no justification for maintaining certain measures because market conditions have changed, this is explained by the BOE itself, then there is also no justification for maintaining the levy”, explain energy sector experts consulted after a first reading of the royal decree published yesterday.
With this change in market conditions, the prices of gas and electricity are already far from the peaks caused by the outbreak of the war in Ukraine, and precisely for this reason the central government has been forced to dismantle the extraordinary measures that he took to alleviate these effects. Neither the Iberian exception that limited the price of gas used to generate electricity to 65 euros, nor the limit on gas that forced large energy companies to sell gas to their customers at maximum prices of 67 euros per MWh. All sales profits above this amount have had to be returned to the State since 2021. From now on, companies will be able to charge the amount they deem appropriate to the contracts they sign, up to a limit of 180 euros , which is what is currently in force in European legislation.
With these two exceptions out of service, the big energy companies have two more arguments to defend the inconsistency of the tax in the judicial processes they have open against the State. But they are also two less arguments to question the attractiveness of the Spanish energy sector for international investors.
Because if the royal decree published yesterday emphasizes one thing, it is the administrative reforms aimed at facilitating and ordering and making the deployment of renewable energy in Spain more attractive.
Thus, Rafael Benjumea, president of the Spanish Photovoltaic Union, assured after the president’s announcement that “the measure guarantees the legal security necessary for the achievement of the photovoltaic implementation indicators defined in the Integrated Energy and Climate Plan ( PNIEC) in accordance with the decarbonisation objectives for 2030”.
It referred to the extension of the administrative deadlines for developing renewable projects in Spain up to 36 months to achieve the milestone of Administrative Authorization of Exploitation, with a binding commitment prior to the choice of the semester for launching the project, as well such as the extension in six months up to 49, for the administrative authorization of construction (AAC).
In the same line, the wind employer, AAE, has expressed itself. On January 25, the deadline for more than 8,000 wind MW to obtain the AAC expired and an administrative saturation similar to that suffered by the photovoltaic sector in January 2023 was approaching. “The extension of the final milestone for obtaining the administrative authorization of exploitation (AAE) is consistent and necessary to allow financing and construction processes in better conditions for the value chain, without temporary pressures that could generate distortions in prices or more financial risks”, they say. They also celebrate the extension to nine years of the deadlines for developing offshore wind projects.
On the other hand, Enagás, the gas infrastructure manager, has received authorization to operate as a “provisional” manager of the hydrogen trunk network. “This is a necessary measure to meet the European goals of decarbonisation and energy independence, and it is in line with what other European countries such as Germany and the Netherlands are already doing”, the company congratulates itself.