Spanish energy companies face strict energy savings goals that carry substantial costs to achieve. In line with the latest EU directives aimed at lowering energy use, the government is raising the required contributions to the National Energy Efficiency Fund (FNEE) for 2024. The total stands at 795 million euros, a significant increase from 393 million the previous year and four times the 191 million recorded in 2022, according to reports from EL PERIÓDICO DE ESPAÑA [Source: EL PERIÓDICO DE ESPAÑA].
The Ministry for the Ecological Transition, led by Vice President Teresa Ribera, has begun approving the new regulation that determines how much electricity, natural gas, and fuel marketers must cut energy consumption this year. Last year, the European Union approved a new energy efficiency directive that will compel member states to steadily raise their saving targets through 2030, driving the cost to Spanish companies in the FNEE higher once again [Source: EU regulatory framework].
The updated community rules extend and tighten the mandatory target for energy end-use reductions. The average annual reduction in energy use across the three-year window from 2016 to 2018 rises from 0.8% to 1.3% this year. In the coming years, the target climbs to 1.5% in 2026 and 1.9% in 2028. In sum, the energy end-use savings target climbs to 4,361 gigawatt hours (GWh) for this year, with the cost of achieving these savings increasing rapidly. The larger energy groups are expected to bear the largest share of these expenses [Source: EU energy policy summary].
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Repsol led the way this year with the largest contribution to the Energy Efficiency Fund, totaling 177.4 million euros through its various subsidiaries involved in electricity or petroleum products, more than doubling last year’s 77 million euros. Other notable contributors include Endesa with 97.15 million (up from 48.6 million in 2022), Cepsa with 85 million (vs. 38.4 million), Naturgy with 67.7 million (vs. 38 million), Iberdrola at 59.6 million, and BP with 41.5 million after a 2022 figure of 17 million [Source: internal fund records].
Resale of savings among companies
Approximately 680 companies subject to the energy-saving regulation are required to contribute cash into the National Energy Efficiency Fund at a rate of 35 percent of the contribution fee. In practical terms, energy groups must inject at least 278 million of the total 795 million into the fund this year. Last year the minimum cash payment was 60 percent, with a total of 236 million. The remaining portions can be exchanged for energy savings certificates, which document the measures adopted to lower energy use [Source: policy ledger].
Last year the government introduced a market for energy savings that allows obligated energy companies to trade these savings through a new system of Energy Savings Certificates. This market enables electricity, oil, and gas companies to buy and sell obligations, sometimes at a discount against the million-dollar contributions to the FNEE, aligning with EU directives [Source: market framework].
The mechanism, crafted by the Ministry of Energy Transition, permits energy companies to acquire savings certificates from large industrial customers and resell them to other firms. Certificates can be exchanged for reductions in the annual contributions to the National Energy Efficiency Fund, and until recently, only Spanish companies were permitted to make such financial contributions to the fund [Source: energy market reforms].
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The new state-created market also allows companies to pay annual energy savings fees with the option to voluntarily exchange a portion of their fund payments for certified savings (including measures for air conditioning, lighting, mobility, and industrial processes). Each certificate represents the saving of one kilowatt hour. Energy companies can liquidate certificates after proving compliance with savings obligations, and they can also market them by permitting other obligated firms to purchase and settle them. Additionally, energy companies may buy certificates from customers such as industrial groups and neighborhood associations to achieve further savings through efficiency investments [Source: regulatory summary].