Government proposal to expand the electricity grid faces industry push for broader access
Last December the government proposed expanding the electricity grid to provide access for major industrial projects, such as the Andalusian Hydrogen Valley planned between Algeciras and Huelva. Electric utilities, however, want this modification extended to new demands like data centers and industries aiming to decarbonize, arguing that the ministerial actions under the Ministry for the Ecological Transition barely meet 5% of their needs.
In concrete terms, the new demand to “plug into” the grid amounts to 6,000 megawatts of capacity, according to a manifesto published this Thursday by Aelèc, the consortium of Endesa, Iberdrola, and EDP, which run the distribution networks alongside Naturgy. The document is also signed by the Association of Manufacturers of Electrical Equipment (AFBEL), the Association of Electric Companies (ASEME), and the Association of Electrical Energy Distributors (CIDE).
Distributors are responsible for delivering electricity from substations to consumption sites using medium and low voltage lines. Substations connect with generation plants through the high-voltage transmission network managed by Red Eléctrica. Therefore, distributors need a transmission network if they want to expand their own distribution grids. The government, however, steers planning on a six-year cycle.
The cost of the networks falls on consumers, reflected in the electricity bill as a toll component; more lines mean higher costs. The most recent grid plan was approved in 2022 for 2021-2026. About a year and a half ago, the Ministry announced an update to introduce “spot modifications” aimed at delivering short-term strategic projects, tied to the Recovery Plan. For example, the electric vehicle plants planned by Stellantis and Volkswagen in Vigo and Sagunto respectively.
In December last year the Ministry published its proposal to gather stakeholder opinions, but distributors remain unconvinced, seeking a broader extension. “The proposal does not align with the new demand needs and must be substantially amended, making use of all available budgets and correcting regulatory limitations that impede its application,” the companies stated.
Electric utilities have been pressing to focus on new demand from large industries and data centers, which consume large energy volumes and want to locate in the country in search of affordable power. They argue that quick planning of investments would attract them and allow the plans to be reviewed on a near-monthly basis rather than every six years, according to industry sources. The government, however, does not appear eager: in December it warned of a possible bubble in interest in grid access and announced a new plan linked to the National Integrated Energy and Climate Plan (PNIEC) for 2024-2030, which would coexist with the current plan.
Separately, the National Commission on Markets and Competition (CNMC) gave its approval to the government’s modification proposal in a report that also urged reconsidering the urgency of including Vigo’s project and adding a more reliable economic impact analysis for Algeciras. After receiving this report and regional views, the department led by Deputy Prime Minister Teresa Ribera must draft a final document with changes as deemed appropriate for approval by the Council of Ministers. Because this is a change to the existing plan, it does not require passage through the Parliament’s Ecological Transition Committee.