Meet the Law - Decree-Law no. 15/2022, of January 14

It was published today in Diário da República, the diploma that establishes the organisation and functioning rules of the National Electric System (SEN), incorporating in a single legislative instrument a wide range of diplomas, namely, the two structural diplomas of this sector, Decree-Law no. 29/2006, of February 15th and Decree-Law no. 172/2006, of August 23rd.

Scope and pending cases

The new diploma will apply to procedures pending at DGEG, without prejudice to the acts already carried out. In pending prior control procedures, the deadlines in progress have the duration established in the legal regime in force on the date the beginning of its counting, with the provisions of this new diploma applying in the subsequent phases of the procedure.

Pending procedures regarding the conclusion of agreement

The procedures that have already received, accepted and paid the budget for the network studies prepared by the respective network operator, will continue their terms and the deadlines established in the new regime will apply to the following calendar year. Requests for agreements with the network operators that have not received the budget (terms of reference) shall continue their terms and shall not apply expire.

Main amendments introduced

1.    Grid Capacity Reserve Title (TRC)

• Predictability and timing of modalities - The modalities previously envisaged are maintained (general access, agreement with the operator of the public service electric network (RESP) and competitive procedure) and greater certainty is introduced as to the procedure and timing of each modality.
• Prior deposit - The previous deposit for the issue of the TRC is now replaced by the need for the interested party to provide a prior deposit within 20 days after notification from the DGEG (general access modality) and in the case of agreement with the network operator with the submission of request of agreement.
• Obligation to pay compensation to SEN - in addition to the deposit, in the case of a TRC issued under the general access modality, the issue of the TRC depends on a prior compensation payment to SEN in the amount equivalent to EUR 1,500 per MVA is required.
• Transferability of the TRC - the transfer of the TRC and licenses is permitted, such transfer being considered whenever there is a direct or indirect change in the holder. The transmission shall be subject to registration. The transfer will however depend on the reinforcement of the deposit in half of the established value, this reinforcement being a condition for the registration to be carried out, with the exception of certain legally defined cases.

2.    Deadlines

• Application for a production license - maximum period of 1 year after the issue of the TRC (when an environmental impact assessment procedure is carried out) or 6 months (when this procedure is not carried out).
• Issue of production license - issued within a maximum period of 1 year after the respective application.
• Issue the operation license - cannot exceed 1 year counting from the date of granting of the production license, with the exception of certain cases.

3.    Production License

• Transferability of the Production Licence - provision is made for the transferability of the production licence, subject to the authorisation of the licensing authority, following the regime for the transfer of the TRC set out above.

 4.    Additional Obligations for Promoters

• Transfer/compensation to municipalities - the promoters of power plants with an allocated connection power higher than 50MW shall proceed to the payment of a compensation on a one-off basis and free of charge, to the municipality or municipalities where the power plant is located, a UPAC with installed power equivalent to 0.3% of the power connected to the power station. The owners of the power stations with allocated connection power equal to or less than 50MVA and higher than 1MVA will pay a one-off cash compensation of EUR 1,500 per MVA of allocated connection power. This compensation obligation only applies to power stations that have obtained TRC after the entry into force of the diploma.
• Dismantling plan - an application for a production licence will need to be accompanied by a dismantling plan.

5.    Overpowering, Repowering and Hybridisation

• Overpowering, repowering and hybridisation are exempt from TRC.
• Overpowering and repowering are considered non-substantial changes and can be requested after the production licence is issued and shall not lead to autonomous procedure of modification title and, in the case of wind or solar plants, no new environmental impact procedure will be required, provided that, in the case of wind plants, there is no increase in the number of towers.
• In wind farms already in operation, it is accepted that they may inject into the grid the additional energy resulting from prior control titles (operating licenses), maintaining the connection power unchanged, with the energy being remunerated in accordance with the remuneration system in force and for the applicable period.
• For all generating stations, with the exception of hydroelectric projects with a connection capacity exceeding 10 MVA, it is accepted that they may increase the installed power up to a limit of 20% of the connection power, with the connection power remaining unchanged.
• The energy from overpowering is remunerated at market prices.
• The so-called autonomous overpowering (held by a legal entity other than the holder of the generating station, provided certain requirements are met) is allowed. The overpowering cannot be transferred independently from the pre-existing generating plant, even in cases of the overpowering is legally separated.
• Regarding repowering, total or partial replacement of the generating equipment of the generating plants is permitted without changing the pre-existing implantation polygon. In the case of total repowering (excluding hydroelectric plants with a connection capacity exceeding 10 MVA) to the connection power initially allocated there is an addition of up to 20%.
• An exception to the 20% limit is foreseen, particularly in cases where the minimum power of the generating equipment existing in the market exceeds the value of the initial connection power plus a maximum of 20%.
• Finally, hybridisation, unlike overpowering, may be granted to a different owner of the generating plant or UPAC to be hybridised without the need for a dominance relationship.

6.    Storage

• The main novelty relates to autonomous storage, which will be subject to a production and operation license in the case of an installed capacity greater than 1 MW or if it is subject to an environmental impact declaration or environmental impact assessment (AIA) procedure, or prior registration and operation certificate in the case of autonomous storage of electricity with an installed capacity of 1MW or less.

7.    Self-Consumption

• The concept of proximity between the UPACs and the utilization installations is detailed, with the law establishing the maximum distance between them.
• It is foreseen the exemption from the RESP operator's intervention, provided the requirements laid down by law are met, being applicable until the injection capacity of the RESP, established by an annual quota set by the Government member responsible for the energy sector, is reached.

8.    Aggregation and Last Resort Aggregation

• The aggregation activity is subject to registration with the DGEG and the last resort aggregation activity is exercised by awarding a license through a competitive procedure.
• Registered suppliers are exempt from obtaining aggregator registration, and are automatically qualified to exercise the aggregation activity after notifying DGEG.

9.    Logistics Operator for Supplier and Aggregator Switching

• The former Logistics Operator for Switching Suppliers (OLMC) now includes the Aggregator, which activity consists of the procedure of change i) of supplier by the consumer and ii) of aggregator by the electricity producer, customer or storage facility holder.
• The award of the OLMCA licence shall be made out by means of a competitive procedure. Such a licence has a maximum limit of 10 years from the date of issue.

10.    Technology Free Zones (TFAS)

• Establishment of the ZLTs, managed by the DGEG, which aim to promote and facilitate research, demonstration and testing activities, in a real environment, of technologies, products, services, processes, innovative models, concepts, business models, specific regulatory frameworks, within the scope of the activities of production, storage, promotion of electric mobility and self-consumption of electricity.

11.    The Electricity Intensive Customer Status

• A specific regime for large electricity consumers is established. The requirements for obtaining the Electricity Intensive Customer Status (ECE) are established by Ministerial Order, namely the minimum qualifying thresholds regarding the average annual consumption of electricity and the degree of electricity. The ECE establishes a set of obligations and support measures, namely the reduction of final prices paid for electricity and access to energy under more competitive conditions, guaranteeing installations a more level playing field vis-à-vis similar installations operating in other Member States.

12.    Articulation with RJUE

• The installation of solar photovoltaic panels on pre-existing built structures that do not constitute buildings or are directly implanted on the ground in delimited areas, namely shopping complexes, large commercial surfaces, industrial parks or lots, logistics platforms, camping parks and similar infrastructures, constitutes a work of little urban relevance.

13.    Connection of Generation Assets to the RESP

• The law equates the connection lines to RESP of generating centres, UPACs or storage installations to the installations that are part of the RESP, granting them the status of public utility, giving the operators, which are responsible for their construction, the possibility to, among other things, request expropriation for public and urgent utility and request the creation of easements on the property required for the installation of these lines.

14.    Environment

• The national AIA authority may, by joint order with the Director-General of the DGEG, identify the types of projects that are not likely to cause significant impacts on the environment, in which the ruling and the decision provided for in article 3 of the AIA legal regime does not take place, namely in situations of electricity generating centre projects with a solar or wind primary source power connection equal to or less than 1 MVA.

15.    Regulation

• The updating of regulations to further detail aspects included in this legislation must occur within a maximum period of 18 months.

Note: The reading of this document does not exempt a thorough analysis of the diploma and the solutions it contains. The content of this document results from a preliminary analysis of the document published in Diário da República carried out by the Energy and Climate Change Team of CMS Portugal.