The transposition of the Renewable Energy Directive (RED III), which came into force in November 2023, marks a critical point in Spain’s energy agenda. With a deadline set for May 21, 2025, the country faces technical, legislative, and political challenges to meet the established goals.

According to Jorge Viñuelas, Head of European Affairs at beBartlet, in a conversation with Energía Estratégica España, the implementation of this regulation will be decisive for accelerating the transition to a sustainable energy model.

Key elements of the Directive where member states have little or no room for maneuver include the mandatory 42.5% renewable energy share in gross final consumption by 2030.

Another key point is the creation of renewable energy acceleration zones, where Spain is more committed, specifying that the deadlines for processing renewable energy projects are limited to 12 months, extendable by 6 additional months.

This will be complex due to the need to coordinate between the 17 autonomous communities, alongside the requirement to establish a single administrative contact point to simplify procedures.

Furthermore, RED III stresses the need to promote cross-border collaboration, setting specific deadlines that do not allow for delays.

Greater Flexibility in Transposition: Incentives, Obligations, and Intermediate Models

However, the Directive also offers some flexibility in choosing the instruments to achieve the goals. Among the options are:

• Positive incentives, such as grants or tax breaks, which could encourage the adoption of renewable technologies.
• Direct obligations for companies, with penalties or fines in case of non-compliance.
• Intermediate models, such as Contracts for Difference (CFD), which guarantee stable prices and reduce risks for investors in renewable projects.

Viñuelas points out that although the tools are varied, “the final choice will depend on the balance between political priorities and the government’s budgetary constraints.”

One of the most controversial issues is the recent elimination of the extraordinary tax on energy companies, which was in place until 2023 and aimed at raising additional funds for the energy transition. However, its lack of parliamentary support led to its suspension, and although the government extended it by decree, the parliament is expected to annul the initiative.

“The absence of this tax could translate into higher targets for these companies, forcing them to accelerate investments or face penalties for non-compliance,” says Viñuelas.

In this regard, the government could toughen its regulatory approach to ensure these companies meet their renewable energy targets.

Critical Technologies: Solar, Wind, Green Hydrogen, and Storage at the Heart of the Debate

Green hydrogen stands out as a strategic priority. Companies like Iberdrola and Moeve (formerly Cepsa) have ramped up efforts to position themselves in this emerging market, but the lack of clear incentives for both production and demand is slowing progress. Viñuelas emphasizes that “a model like Contracts for Difference (CFD), which ensures stable prices, would be crucial to attract investments.”

Energy storage, along with large-scale wind and solar energy, on the other hand, faces challenges in its deployment due to significant social opposition.

Although the directive categorizes storage assets as of “superior public interest,” the definition of specific criteria to ensure their implementation is still pending.

This is particularly relevant in regions like Asturias, Galicia, Catalonia, and Andalusia, where spatial restrictions generate tensions between local stakeholders and project developers.

Decarbonization and Demand: Parallel Discussions

The debate over the transposition of RED III reflects a delicate balance between promotion and imposition. While “administrative simplification and reduced deadlines are important advances,” as Viñuelas states, designing effective policies remains a challenge. This extends beyond electricity, affecting sectors like transport and industry, where the integration of renewables remains limited.

Designing demand incentives and debating the decarbonization of non-electric sectors are crucial, though they run on parallel paths.

On one side, demand incentives, such as subsidies for electric vehicles, green hydrogen, or storage systems, aim to stimulate the consumption of clean technologies.

These measures are crucial for creating a sustainable market that encourages companies to invest in infrastructure and renewable production.

However, according to the Head of European Affairs at beBartlet, this approach requires “meticulous planning to ensure competitive and affordable prices, such as Contracts for Difference, to prevent the risk from falling on end consumers.”

On the other hand, the decarbonization of sectors such as transport and industry, which are heavily reliant on fossil fuels, represents a regulatory challenge.

Although RED III promotes the inclusion of renewable energy in these sectors, specific actions, such as the electrification of heavy transport or the transition in the chemical industry, require long-term policies and sectoral debates that go beyond the immediate framework of the transposition.

While demand incentives focus on immediate, tangible solutions, the decarbonization debate addresses structural changes that demand more time and resources.

Meanwhile, reforms in network compensation rates and in the planning processes of the transmission network are expected.

Although these discussions progress in a separate domain, their impact on the overall energy transition framework should not be underestimated: accelerating one can facilitate the progress of the other, creating a more robust ecosystem for the energy transition.

“RED III will specifically address how to integrate more renewables into the grid, while discussions on demand and grid capacity will take place in other areas, as they operate in separate arenas with specific actors and priorities,” emphasizes the expert.

Next Steps

With only five months remaining, Spain faces a complex task to ensure that the transposition of RED III is effective and timely.

From technological and regulatory challenges to political controversies, the next steps will define not only the compliance with European goals but also the future of the national energy transition.

The European Union could impose fines on Spain, adding economic pressure to an already complex scenario, which would not be surprising given that this government has delayed compliance with warnings and has taken its time to meet deadlines.

However, although there is the option to resolve it through a Royal Decree, Viñuelas highlights that “approving the transposition urgently may accelerate the process but sacrifices public debate and the opportunity to develop a comprehensive and well-adapted regulation.”

This rushed approach could limit the potential of the directive and leave critical issues unresolved, compromising the long-term sustainability of the energy transition in the country.

“The key will be to combine effective incentives with clear regulation that accelerates processes without compromising fairness or sustainability,” concludes the expert.