Royal Decree 314/2023, 25 April, developing the procedure and requirements for the granting of administrative authorisation for closed electricity distribution networks

Spain publishes Royal Decree on administrative authorisation for closed electricity distribution networks

On 26 April 2023, Royal Decree 314/2023 of 25 April was published in the Official State Gazette (Boletín Oficial del Estado). The decree is aimed at developing the procedure and requirements for granting administrative authorisation for closed electricity distribution networks.

The Royal Decree establishes the rights and obligations of owners of closed electricity networks towards the General Directorate of Energy Policy and Mines (Dirección General de Política Energética y Minas), the electricity system and users.

 

What is a closed electricity distribution network?

A closed electricity network distributes electricity to companies in industrial areas not exceeding 8 km², through the consumers' own networks.

For the network to be created for the purposes above, the following requirements have to be met:

• Users must be deemed industrial consumers¹ and will be connected neither to each other in cascade, nor to the transportation or distribution networks, but only to the closed electricity distribution network.
• For specific technical or safety reasons, the operation or production processes of the users of the network must be integrated; or at least 50% of the consumption connected to the closed electricity distribution network must belong to the owner or operator of the network, or to companies where it holds over a 50% stake.
• Users must not be connected to other closed electricity distribution networks.
• If they are connected to several points of the transportation or distribution networks, they must be of the same voltage level and belong to the same transportation or distribution company.
• The requirements of the EU Commission Regulation 2016/1388, of 17 August 2016, establishing a network code on demand connection, and the provisions of regulations approved for the development and implementation of such Regulation, must be met.

 

Network owners

Legal, technical and economic capacity

Network owners must be incorporated as a mercantile or cooperative company, of Spanish nationality or, if applicable, of another EU Member State, with a permanent establishment in Spain. And their exclusive corporate purpose must be the distribution of electricity energy in a closed electric distribution network.

They have to get a certificate from the General Directorate of Energy Policy and Mines confirming the capacity to operate and maintain the electric networks under their ownership and management. Or they can get a written document that verifies the existence of a contract for a term of no less than one year with a company dealing with the performance of such tasks.

They must also prove they have tangible fixed assets for at least 50% of the gross value of the assets.

Rights and obligations

In general, network owners have the same rights and obligations as electricity power distributors, with the following particularities:

• Network owners are liable for the safety of the network and for the safety of people, goods and services related to the activity performed.
• They must comply with the obligations imposed under the authorisation resolution.
• They must always maintain the requirements of legal, technical and economic capacity.
• They must keep up to date with payment of tolls and charges.
• They have to make the private network available to the distributor or carrier to which it is connected, if necessary to guarantee supply.
• They must ensure that consumers who so request are entitled to the voluntary price for small consumers or social bonus.
• Insofar as no remuneration is received from the system, and they collect no tolls from connected consumers, sections 1.d, 1.f, 1.h, 1.h, 2.h, and 2.j and 3.a of article 40, article 41, and section 3 of article 51 of Law 24/2013, of December 26, of the Electricity Sector, regarding the incentives and penalties applicable to the remuneration of the activities of the closed electric distribution networks, based on the quality of service obtained, will not apply.
• They won’t be required to have web platforms for the management of access and connection requests, or for the collection of data, and they will have to purchase the energy lost in their networks.
• They have to comply with the supply quality obligations related to the maximum levels of disturbance caused by electricity consumers, in accordance with regulations in force.
• They are solely responsible to the owner of the distribution or transport network to which it is connected, to the manager and to the system.

 

Economic and operating regime

Closed electricity distribution is not deemed a regulated activity so it won’t receive remuneration charged to the system.

The owner will only pay into the system the tolls and charges that they would have to pay as if they were any other consumer, and, if applicable, those charges corresponding to consumers connected to their networks, who may benefit from the PVPC or the social bonus if they’re entitled to it.

The operator of the closed electricity distribution network will bill all consumers connected to its networks (except consumers who have opted for the PVPC or the social bonus) the amounts previously agreed to meet the payments of tolls and charges. And it will meet all other costs incurred by the operator of the closed electricity distribution network and passed on to users.

Network connection

Both consumers and generators connecting to the closed distribution network must:

• sign an access contract with the network owner, which will include the particularities applicable to this type of network, and comply with the requirements for connection to the network, as set out in the applicable regulations; and
• have the necessary equipment for the correct billing of the electric energy consumed and, if applicable, generated.

The closed electricity distribution networks will have metering equipment at their border points with the transport and distribution networks to which they are connected, for correct billing.

Authorisation

Closed electricity distribution networks have to apply for an authorisation from the General Directorate of Energy Policy and Mines of the Ministry for Ecological Transition and Demographic Challenge (Ministerio para la Transición Ecológica y el Reto Demográfico).

The request should include any documents confirming the legal, technical, and economic capacity of the applicant, and the remaining documents provided for under article 17.2 of the Royal Decree.

The request, with its accompanying documentation, will be submitted to the National Markets and Competition Commission (Comisión Nacional de los Mercados y la Competencia) for a report. The Commission will assess compliance with the requirements relating to the economic and financial sustainability of the electricity system, and the absence of discrimination between groups of consumers who, being connected to the closed electricity distribution network, have similar characteristics.

A resolution will be issued within six months from the registration date of the application in the electronic registry.

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¹Consumers belonging to groups B or C of the CNAE (Código Nacional de Actividades Económicas) and those belonging to groups D and E, in accordance with section III of Annex II to Regulation (EC) 295/2008 of the European Parliament and of the Council, of 11 March 2008, on structural business statistics, are deemed as industrial consumers for the purposes of compiling statistics on the industrial sector. However, such networks shall supply up to a maximum of 100 non-industrial consumers, provided that: (i) they are located in the same geographical area; (ii) they have or have had an employment or business relationship with the owners or partners of such network, or with other industrial consumers connected to the network; (iii) they represent less than two percent (2%) of the total annual consumption of the consumers connected to the network; and (iv) they are located on plots of land adjacent to those of industrial consumers, or only separated by rivers, streams, railways, roads or public roads.