The energy transition in Spain depends on investment in electricity grids, but difficulties within the regulatory model and fiscal uncertainty are creating tensions within the sector.

Marina Serrano, President of the Spanish Association of Electricity Companies (AELEC), states, “It is essential that fiscal policy provides certainty. Investors need a stable framework; we cannot be at the end of December not knowing what will happen on January 1st.”

In an interview with Energía Estratégica España, Serrano highlights that this climate of insecurity threatens the attraction of capital in an environment where countries like Germany and France are approving ambitious investment plans for grids.

Tax on Electric Companies

Although last Thursday, the Spanish Congress voted against maintaining this tax burden, the government insists on its importance to sustain essential revenues in the context of the energy transition and economic recovery and has proposed its extension.

AELEC’s president argues that this measure is poorly designed and directly affects the competitiveness of Spanish electricity companies.

“The tax does not align with European regulations, which exclude electricity companies and focus on fossil fuels. Furthermore, it is levied on sales rather than profits, exacerbating the disadvantage for Spanish companies compared to their European counterparts, who do not bear this burden,” explains Serrano.

The government argues that the tax is necessary to ensure the financial sustainability of the system, noting that it generated close to €1.5 billion in revenues in 2023.

The Treasury has introduced changes in tax models, such as the quarterly filing of declarations, aiming for greater control and efficiency in revenue collection.

However, Serrano warns: “Investors need clarity. It is not feasible for such a strategic sector to operate under conditions of regulatory instability.”

She stresses that fiscal policy should penalise emission-heavy activities and incentivise those aligned with the energy transition, noting that “this tax does not fulfil that purpose and hinders the investments needed for decarbonisation.”

Furthermore, she emphasises that such measures place Spanish companies at a competitive disadvantage compared to their European peers.

A Regulatory Model that Limits Investment

In Spain, investment in grids is a regulated activity, meaning companies cannot act freely.

“To invest, companies must present plans to the CNMC, the Ministry, and regional governments, which then have to approve them, limiting agility at a time when electricity demand is growing exponentially,” says Serrano.

As a result, she confirms that there are 30.7 GW of access requests solely in distribution networks, mainly for data centres, fast-charging points, and industrial sectors looking to decarbonise.

This demonstrates the urgency of relaxing investment mechanisms to accommodate new demands.

Moreover, the director stresses the importance of anticipatory investments: “We cannot wait for the requests to arrive. The grids must be prepared in advance to bear the projected load.”

Priorities for 2025: Regulatory Framework and Key Investments

Looking ahead to 2025, AELEC faces a pivotal year to consolidate the regulatory framework and advance the investments needed to modernise the electricity grids. In addition to the approval of the Financial Remuneration Rate (TRF) and the methodology applicable to investments, Serrano outlines a clear list of investment priorities:

1. Expansion of distribution network capacity: This will meet the demands of new sectors like data centres, fast-charging points, and industrial processes seeking decarbonisation. Currently, a third of access requests cannot be met due to lack of capacity.
2. Investments in digitalisation: Networks must evolve towards an intelligent model that allows for flexible management of distributed energy, storage, and self-consumption. “Digitalisation is crucial to maximise the use of existing infrastructure and ensure the integration of new generation and demand sources,” explains Serrano.
3. Development of anticipatory investments: These measures, also promoted by the European Commission, aim to ensure networks are prepared for future demands, such as the intensive electrification of industrial zones or the installation of electric vehicle infrastructure. “We cannot wait for requests to arrive; we must pre-empt the needs,” asserts Serrano.
4. Modernisation and robustness of the grids: Beyond expanding capacity, investments will focus on reinforcing existing infrastructure to make it more resilient and efficient. This includes upgrades to key system nodes and connections with transmission networks.

Serrano also underscores the importance of the regulator and the government adopting measures that remove existing barriers to investment. In particular, she insists on the need to review the investment cap tied to GDP and establish competitive remuneration conditions at a European level. “It is essential to guarantee an adequate return to attract the necessary capital and avoid falling behind countries like Germany or France,” she warns.

Regarding the regulatory framework, AELEC will prioritise dialogue with the CNMC and the Ministry to explain the sector’s needs and ensure that new regulations facilitate the electrification of the economy. Additionally, the association advocates for the implementation of demand auctions and the promotion of long-term contracts (PPAs) to provide price stability for consumers.

For Serrano, 2025 represents a unique opportunity to lay the foundations for a robust and sustainable electricity system. “The energy transition in Spain depends on the adoption of measures this year that unlock investment in networks. The more demand that is connected, the better the infrastructure will be used, and costs will be spread across more users, benefiting the entire system,” she concludes.

With the international environment moving towards massive investments in grids, Spain must act quickly to ensure that regulatory and fiscal conditions do not become a hindrance to the energy transition.

Review and Milestones of 2024

Marina Serrano’s review of 2024 reflects a year of significant progress in the electricity sector, though key challenges remain. Among the achievements, she highlights the approval of the updated National Integrated Energy and Climate Plan (PNIEC), which sets ambitious targets for 81% renewable electricity generation by 2030.

“This PNIEC incorporates essential elements such as the electrification of demand, set at 34% of total consumption, and advancements in storage, heat pumps, and industrial decarbonisation,” Serrano highlights.

Another major milestone was the publication of the CNMC’s Access and Connection Circular, which establishes a regulatory framework for addressing the growing number of network connection requests.

The importance of this regulation lies primarily in introducing key concepts such as flexible capacity and measures to enhance transparency in grid management.

“It is a crucial step in modernising the electrical infrastructure and ensuring a balance between supply and demand,” says the director.

As for the public consultation on the capacity market, Serrano views it as a structural advance that will ensure supply security and promote storage in a system dominated by renewable energies.

According to AELEC’s president, “This mechanism will facilitate demand management and position the consumer as a key actor in the electricity market.”

Finally, she highlights as positive the leadership change in the Ministry for Ecological Transition, with Sara Aagesen as the new minister and Teresa Ribera taking up a strategic position in the European Commission.

“With Sara Aagesen, we maintain continuity in the ministry’s policies, and her dialogue and communication skills with the sector are invaluable. Meanwhile, Ribera’s experience in energy transition strengthens Spain’s position in Europe,” concludes Serrano.