Reforms expected to spark significant energy investment in Spain | Fieldfisher
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Reforms expected to spark significant investment in Spain's energy sector



Efforts to simplify grid access and incentivise renewable power procurement have created an attractive environment for funding new projects.

Spain's renewable energy sector has witnessed a significant increase regulatory activity since the end of 2020.

Perhaps the most remarkable event was Spain's power capacity auction on 26 January 2021, when a total of 3.034GW was auctioned at a weighted average price of €24.74/MWh, for a remuneration period of 12 years (starting on 30 September 2023 for solar photovoltaic (PV) plants and 30 September 2025 for offshore wind farms).

Highly competitive prices helped spur strong demand for capacity, and the Spanish government plans to launch another auction later this year, as part of an indicative calendar for at least 19.44GW of renewable capacity to be tendered until the end of 2025.

Opening up grid access

Spain's Royal Decree 1183/2020 and the Spanish Regulatory Authority Circular Note 1/2020 of 29 December 2020 on access and connection to the electricity transmission and distribution grids, which entered into force on 31 December 2020, is also a major step forward for Spain's power market.

The decree establishes a simpler, more transparent framework for energy market participants – including those involved in generation, transmission, distribution, consumption or storage of energy – to access and connect to the Spanish grid.

This reform effectively unblocks what had been a major barrier to growth in Spain's energy sector.

Royal Decree 1183/2020 also brings into force Article 33 of the Electricity Sector Act (seven years after its approval), although the moratorium on new access permits for power plants will only be lifted once network managers have published the information on available grid access capacity at the different nodes.

Network managers should receive a precise calculation of the access capacity for each node by June this year. Once this happens, investment in Spain's electricity market is expected to take off.

The reform of network access rules was driven partly by Spain's commitments to tackle climate change – by allowing more renewable energy to be supplied and consumed through the grid – and partly by the need to boost investment, following the economic damage caused by the Covid-19 pandemic.

Appetite for CPPAs remains strong

Even though the latest capacity auction has put downward pressure on Spanish electricity prices, so far this has not dampened demand among large power consumers for new corporate power purchase agreements (CPPAs) in Spain.

Companies including Shell, Danone, Cellnex, Bayer, Novartis, Waga, Makro and Ferrovial have recently entered CPPAs, demonstrating that this route for financing renewable projects remains a viable and popular option in Spain.
Future CPPA negotiations will naturally take into consideration the renewable energy price signals provided by recent auctions.

Other factors – such as falling power demand and project delays caused by the Covid-19 pandemic – will also need to be considered.

Looking towards the horizon, Spanish energy market participants are waiting for the announcement of the next Electric System Sustainability Spanish Fund, fiscal amendments and potentially some wholesale market modifications – all of which CPPA parties need to bear in mind when negotiating long-term deals.

For more information on factors affecting strike price negotiations and risk-sharing arrangements, read this summary of Fieldfisher's recent webinar on CPPAs in Spain and our Corporate PPAs: FAQs.

Outlook for CPPAs in Spain

From a macro perspective, there are several factors that are likely to contribute to the continued growth of CPPAs in Spain.

These include:


In late December 2020, the Spanish government approved the Statute for Electro-Intensive Consumers (specifically, companies that have consumed more than 1 GWh per year in two of the previous three years and consume at least 50% of their energy during off-peak hours), imposing an obligation to contract at least 10% of their annual electricity consumption over five years through a CPPA.

This CPPA can be backed with the Spanish Reserve Fund (FERGEI), which will assume some of the financial risks faced by energy generators/suppliers signing CPPA deals with electro-intensive consumers.

FERGEI is managed by Spanish export credit agency CESCE and will have an annual budget of €200 million, or €600 million over the first three years.


Spain is aiming for 60GW of renewable energy capacity to be installed by 2030 and simultaneous industrial sector decarbonisation, under National Energy and Climate Plan (ENCP).

To achieve this, more industrial and large energy consumers will need to switch to long-term renewable energy supply, most likely under CPPA arrangements.

Energy efficiency

In January, the Spanish government launched a public consultation regarding its “White Certificates” (TEE – Titoli di Efficienza Energetica) programme, which will certify energy savings achieved (or acquired) by both all electricity and natural gas suppliers as well as petrol and LPG operators.

This represents a new market opportunity for energy companies to capitalise on a potentially generous incentive scheme.


NextGenerationEU (NGEU) is a €1.8 trillion fund designed to boost the economic recovery of EU Member States from the impact of Covid-19.

As part of the NGEU project, Spain could receive up to €140 billion between 2021 and 2026 – around 70% of which is likely to be earmarked for energy transition (including green hydrogen production and storage) and digitalisation projects.

The Spanish government's energy market reforms are partly intended to make it easier to absorb these funds, by allowing investors to participate in qualifying projects.

EU citizens and renewable energy communities directives

Finally, Spain is in the process of implementing EU Directives 2018/2001 (the revised renewable energy Directive) and 2019/944 (the Directive on common rules for the internal electricity market) into domestic legislation.

These directives form part of the EU's "Clean energy for all Europeans package" and seek to enable greater involvement by energy consumers and/or energy communities in energy markets, by harmonising the regulatory environment and ensuring a level playing field for all participants.

Together, these factors have whetted the appetite of investors, both experienced and new, to fund new renewable energy projects in Spain.

In our view, this is the right moment to consider M&A transactions and seek appropriate fiscal and regulatory advice.

This article was authored by Ramón Vázquez del Rey, a partner in the public law and regulatory department at Fieldfisher JAUSAS in Madrid and Rodrigo Martos, a partner in the corporate/M&A department at Fieldfisher JAUSAS in Madrid.