The new offshore wind regulation

The Government has finally approved Royal Decree 962/2024, of 24 September, which regulates the production of electricity from renewable sources in offshore installations.

This Royal Decree regulates the production of electricity in offshore renewable installations located in all marine waters subject to Spanish sovereignty or jurisdiction, as well as those located in zones I and II of ports of general state interest (hereinafter, the ‘Royal Decree’)

The regulatory text provides for a competitive procedure, which is necessary to initiate the processing of the authorisations provided for in the electricity regulations, by means of which the following rights are granted:  

1. The economic regime for renewable energies.

2. The reservation of access capacity at a specific node of the electricity transmission grid. This reservation, however, does not grant the permits that may be required, such as the access and connection permit, which will have to be processed at a later date. Although nothing is said in this Royal Decree, all the nodes concerned should be reserved and not only those already reserved for on-shore capacity tenders, which does not seem to launch. Once again, the increase in investment in networks so often called for by the sector is necessary (the new planning is expected to be approved at the end of this year).

   The unallocated or uncalled capacity will be reserved for a future tender and the capacity that is released or emerged at these nodes will be added to this unallocated or uncalled capacity and will be reserved for a future tender.

3. Priority in the granting of the concession for the occupation of the public maritime-terrestrial domain, although the consequences of the frustration of this procedure and the necessary modification of the Coastal Law are not regulated either.

However, the effectiveness of these rights is conditional upon registration in the electronic registry of the economic regime for renewable energies in operation in accordance with Royal Decree 960/2020.

The competitive procedure is carried out in the following phases: 

1. Approval of the regulatory bases by order of the Ministry for Ecological Transition and the Demographic Challenge (hereinafter, the “MITECO”), which will include, among other aspects, the following:

• The quota of power (cupo de potencia) to be awarded.
   
• The area, or areas, where the generating facilities will be located, which will be delimited by the geographical coordinates of the vertices of the polygonal lines that comprise them.
   
• The technologies, characteristics and requirements to be met by the facilities.
   
• The remuneration parameters and elements that specify the economic regime for renewable energies to be applied. These parameters include, among others, the deadline for the availability of the installation, the situations for the granting of extensions, where applicable, and the starting date of the maximum delivery period. It will be important to have introduced mechanisms for updating, for example, O&M costs (in Ireland inflation is taken into account). 
   
• The amount of the guarantees to be submitted for registration in the electronic registry of the renewable energy economic regime in pre-assignment status.
   
• The requirements to be met by the parties to be able to participate in the competitive procedure. Requirements related to the legal form, technical solvency, experience and size of the company and other economic-financial aspects may be demanded. The incorporation of such requirements must consider the whole legal acquis to avoid market foreclosures prohibited by national and Community legislation and case law.
   
• The details of the public-private dialogue phase, referred to below.

2. A public dialogue phase is held with the participation of the affected actors and with the aim of favouring social acceptance and coexistence with other uses of the sea. These proposals and alternatives may be incorporated, in whole or in part, in the order of call for tenders. This procedure is reminiscent of the competitive dialogue already known in the field of public procurement and developed for auctions in France, but which may delay the procedure for a result which was precisely what seemed to have been achieved with the Maritime Spatial Plans regulated in Royal Decree 150/2023, the legality of which (based on administrative discretion) was confirmed by the Supreme Court. 

3. Call for tenders by order of the MITECO. The call for tenders shall include, among other aspects: (i) the timetable for the competitive procedure; and (ii) the details of the competitive procedure, such as the documentation to be submitted, the reserve price (maximum economic bid price) and the risk price (minimum economic bid price), which may be confidential (the latter has been the case in recent on-shore renewables auctions).

Award criteria: The applications that obtain the highest score will result in being awarded, until the quota of power to be awarded is reached.

Non-economic criteria may be included up to a maximum of 30% of the weighting. But they must be related to the participating subjects or be related, among other aspects, to the installation’s: (i) design (occupancy ratio, distance to the coast, number of wind turbines, contribution to innovation, etc.); (ii) environmental impact (i.e., carbon footprint of the installation and its components); (iii) socio-economic impact, on employment and the local, regional, national and EU value chain (which is relevant given the difficulties of the supply chain, and strategic dependence on components, but which may require the corresponding analysis from the point of view of internal trade within the EU), participation of SMEs (which should always be voluntary and not decisive on pain of infringing the necessary freedom of enterprise, and business secrets), compatibility of other uses, etc. ); (iv) dismantling; and/or (v) ability to contribute to the quality and security of electricity supply.

The specific remuneration of each installation benefiting from the economic regime shall be obtained based on its award price, the remuneration parameters of the technology to which it corresponds, the characteristics of each installation and its participation in the electricity market, in accordance with the provisions of Royal Decree 960/2020.

In addition, several interesting provisions are highlighted below:

1. The possibility of transferring the ownership of the rights conferred in the competitive procedure, subject to prior authorisation of the Directorate General for Energy Policy and Mines (hereinafter, the “DGPEM”) and provided that the concessionaire meets the necessary requirements.
    
2. The possibility of the developer withdrawing from the construction of the installation, which must be communicated to the DGPEM. Withdrawal will entail: (i) cancellation due to non-compliance of the registration in the electronic registry of the renewable energy economic regime in pre-assignment status; (ii) the expiry of the access and connection permits granted and of the grid access capacity reservation granted in the competitive procedure; and (iii) the execution of the guarantees deposited, unless exempted by the DGPEM. However, the order approving the bases of the competitive procedure may establish other cases. It should be possible to consider other cases (already foreseen in the public procurement rules) that allow mitigating the allocation of all risks to the promoter (i.e., unforeseeable or unforeseen events that financially unbalance the project, force majeure, regulatory risks, network congestion, etc.).
    
3. The possibility of modifying certain aspects of the proposal awarded in the competitive procedure, provided that: (i) the modifications would not have resulted in a different successful bidder from the competitive procedure; (ii) they do not entail an increase in the price awarded; and (iii) the installation can be considered to be the same, in accordance with Royal Decree 1955/2000.
    
4. The particularities of the regime for: (i) facilities located in non-peninsular territories, a true driver for offshore wind, which will be governed by the provisions of Royal Decree 738/2015; (ii) innovative facilities (offshore wind with an installed capacity not exceeding 50 MW and non-wind with an installed capacity not exceeding 20 MW); and (iii) facilities located in ports of general state interest. 
    
5. Applications submitted under Royal Decree 1028/2007 will be filed, a consequence that may give rise to financial liability depending on the case. This filing does not apply to applications for the construction and expansion of electricity generation facilities of renewable origin that are physically located in the territorial sea and of technology other than wind power, and for offshore wind power generation facilities with a capacity of no more than 50 MW, which will continue to be processed in accordance with Royal Decree 1955/2000. 

The approval of this Royal Decree has coincided in time with the approval of the new National Energy and Climate Plan 2023-2030 by Royal Decree 986/2024, of 24 September, to continue implementing the “Roadmap for the development of offshore wind and marine energy in Spain”. This Roadmap aims to reduce the administrative obstacles to the development of this renewable energy source and to achieve energy targets of between 1GW and 3GW of floating wind power by 2030. 

It also falls within the context of investment aid for pilot projects and test platforms and port infrastructures for marine renewables, financed by the European Union, NextGenerationEU, which totalled 146.9 million euros for 21 actions aimed at promoting test platforms and the demonstration of new prototypes in the field of marine renewable energies, including floating wind projects with wave-power hybridisation.

We would like to thank associate María Fernández, from the Public Law practice, for her collaboration in the production of this article.