The new life of Self-Consumption in Spain

The vision of a decentralized energy generation and a wider participation of renewable sources will require an exponential growth in self-consumption systems, especially in sunny regions like Iberian Peninsula. Still, after 5 years since the first Law framing the self-consumption concept, this alternative to generate and consume power had a shy evolution in Spain due to the famous “sun tax”.

On April 5^th, one of the laws most expected by the energy and environmental sectors was published: the RDL 244/2019, which defined the administrative, technical and economic considerations for the self-consumption of electricity.

This law is a confirmation of what was published in the RDL 15/2018, in October 5^th of 2018, where urgent measures were identified towards the energy transition plan and for consumers protection.

The RDL 244/2019 presents several changes already published in the previous one as well as other options to trigger the growth of this sector aiming to:

Encourage economic activity and local employment due to its distributed and decentralized nature;
Environmental awareness since the focus is to promote renewable based self-consumption systems to reduce the emission of greenhouse gases;
Achieve a low carbon economy;
Reduce the costs of the power grid due to a less centralized demand.

The bullet points of the New Law for Self-Consumption

A new definition for self-consumption was defined as: “is defined as self-consumption, the consumption by one or various consumers of electricity from production systems close to the consumption sites and associated to those.” This new definition of self-consumption systems is a very important aspect, particularly in cities, since that, from now on, the generation system will not need to be located in the same physical space of the consumption point. It is now possible to install the self-consumption generation system close to the consumption point.

The law also introduced a new figure of “Group Self-consumption” which is, by definition: a group of various consumers that consume, under previous agreement, energy from close by installations that generate power. This new entity gives different consumers the possibility to join and consume from the same energy source, stimulating the spread of self-consumption systems in communities, between companies or even between factories/plants that share the same location.

The 2 main types of self-consumption are now:

Self-consumption without surplus – where the installation has a mechanism that prevents the injection of energy into the public power grid;
Self-consumption with surplus of energy – where this surplus can be injected into the public power grid. within this case, two situations are accepted:
1. Compensated surplus – Where the producer and consumer chose voluntarily to agree in a compensation mechanism of the surplus of energy produced:
  - The source of primary energy must be of renewable origin;
  - The installed system should have a capacity equal or below 100 kW;
  - The consumer has only one supply contract corresponding to its own consumption and that of the auxiliary systems related to the generation system;
  - The self-consumption system is not receiving any sort of remuneration;
  - The consumer and the producer celebrated a contract regarding the surplus compensation mechanism
2. With surplus without compensation. This situation will be applied to systems that fail to have any of the requirements needed to belong to the previous figure (a) or that voluntarily chose not to protect themselves under a compensation mechanism.

The DRL 244/2019 confirms the rules published in the law published in October of 2018 where all the self-consumed energy is now free of all taxes and tariffs, if the energy source is renewable, cogeneration or waste incineration.

The recent law also allows the integration of auxiliary storage systems in any type of self-consumption system if those storage systems are complying with the safety and quality assurance defined in such DRL. The storage system and the self-consumption system should share the same metering equipment.

Other important aspect to encourage the growth of self-consumption systems was also reviewed in the new DRL 244/2019: paperwork. The bureaucracy and the procedures were reduced and simplified to encourage the use of these systems. We highlight the following:

Autonomic registration (territorial): optional, created by the Autonomic Communities (CCAA) and applied to any type of self-consumption ((ANEXO II);
Self-consumption administration (state-owned): mandatory, is divided by a section related to the self-consumption without surplus and other related to the self-consumption with surplus (subdivided by type a, Type b with only one supply contract for the associated consumption + the consumption from auxiliary components, or with distinct contracts). For the systems with an installed capacity below the 100 kW and connected as a Low voltage, the state-owned registration will be done by the CCAA;
Generation administration: related to the self-consumption with surplus of production for the systems with an installed capacity above 100 KW signed previously in the administrative registration of self-consumption (state-owned).

From the management point of view, the energy distributor of the region is now the party that modifies the contact of grid access instead of the small consumers under the self-consumption norm, being enough the consent from the consumer. The information used will be the one sent to the CCAA. The consumer will have to subscribe the contract directly with the distributor or through an energy provider.

Regarding the compensation mechanisms of the surplus of energy generated from Type a, the contract for the compensation mechanism of the energy surplus generated is defined as an agreement between the producer and the consumer associated for a simplified compensation mechanism between the deficit of the consumptions and the total amount of energy generated in surplus of the related generation plants. In the case of Group self-consumption, the distributor should be informed about the criteria applied for the distribution for all the players involved.

The simplified mechanism is applied as follows:

If a contract with a supplier from the free market is in place, the energy consumed from the grid will be priced under the price negotiated with the supplier. The surplus of energy generated from the self-consumption system will also priced under a negotiated price between the parties;
If a contract with a supplier from the regulated market is in place, the energy consumed from the grid will be priced under the voluntarily hourly price (PVPC). Regarding the surplus of energy generated from the self-consumption system, this excess is priced based on the average price from the daily and intra-daily market results minus the deviation costs.

In any case, the price of the surplus of energy generated cannot be superior to the price of the hourly energy consumed from the grid. The regularization of this balances should be done periodically and without exceeding a monthly period.

The energy injected in the grid that originated from the surplus of a self-consumption system under the type a of the systems with compensation mechanism is free of access tariffs. However, the capacity term will be billed according to the capacity measure in the metering equipment installed in the border point.

Last Friday another tool was presented towards a distributed generation future and for a more sustainable path. This new Decree-law can encourage a broader interest in the spread of self-consumption systems in a more competitive and profitable way.

There was some uncertainty about the publishing date of this document due to the next general election (that will take place on April 28^th), but the Minister for the Ecologic Transition delivered what was promised.

Lets now see the impact of the self-consumption in the Spanish Energy Transition.

Jorge Seabra | Energy Consultant