Energy sector news

Approval of a new mechanism to compensate municipalities

Decree-Law no 18/2024, of 2 February was published creating a mechanism for compensating municipalities in cases where they are crossed by the public service electricity network (RESP) infrastructures, which are the responsibility of the electricity network operators that make up the National Electric System (SEN).

In order for such compensation to take place, RESP infrastructures must be qualified as essential to the realization of high-impact strategic electricity projects that generate significant negative externalities.

According to the decree-law, the following are considered high-impact strategic electricity projects:

1. The Feira-Ribeira de Pena line;
2. The Ferreira do Alentejo-Panoias and Panoias-Tavira lines;
3. The Fanhões-Rio Maior line;
4. The Alqueva-Divor line;
5. The Ferreira do Alentejo-Pegões and Pegões-Rio Maior lines;
6. The Fundão-Vilarouco line;
7. The Lares-Arouca line;
8. The Portuguese-Spanish interconnection: Ponte de Lima-Fontefría line.
    

The amount of compensation is limited to:

1. 1 % of the value of the direct external costs of the investments justifying it, in the case of substations, switching stations and other investments;
2. 5 % of the value of the direct external costs of the investments justifying it, in the case of overhead lines.

The amount of compensation also depends on (i) the existence of significant negative local externalities caused by the project in the territory of the municipality in question; (ii) recognition of the respective quantification, considering the significant damage demonstrated, less the effects generated by the realization of the project.

For the compensation to be awarded, the municipality must submit a request to the RESP operator, which has sixty days to decide on the compensation. Compensation is granted through the signing of a protocol and is borne by the RESP operator.

This decree-law entered into force on 3 February and can be consulted here.
 

Amendment to the tariff applicable to the production of electricity through the incineration of urban waste

Ordinance no. 40/2024, of 5 February, was published, amending the tariff applicable to electricity generating centers that use municipal waste as a source of electricity in energy recovery facilities, for the purpose of incinerating undifferentiated municipal solid waste from municipal waste management systems.

The legislative act amends Order No. 244/2020, which initially defined a tariff consisting of the market price of electricity plus a bonus, which would be gradually reduced until December 2024.

Due to the evolution of the market, the electricity market price has several times exceeded the guaranteed tariff, causing economic damage to electricity-producing centers. The proposed amendment aims to correct this discrepancy and is considered urgent in order to avoid economic damage to the operators.

As such, Article 2 of Order No. 244/2020 was amended, which establishes the progressive reduction of the subsidy applied to the tariff in question. This reduction is detailed in specific coefficients, culminating in a coefficient of 0.25 in the first half of 2024.

The tariff set out in paragraph 1 of the same article is valid until June 30^th, 2024. From that date onwards, the sale of this electricity will be carried out through market instruments, and the contract signed with the supplier of last resort will expire.

The Order comes into force on 6 February and can be consulted here.