“Grid Flexibility and Storage” incentive for companies

Ordinance 176-B/2024/1 of July 30 approved the Regulation on the “Grid Flexibility and Storage” Incentive System for Companies (the “Regulation”) included in investment RP-C21-i08 of the Recovery and Resilience Plan (the “RRP”).

Objective of the incentive

This investment “aims to increase the flexibility of the public electricity grid by introducing flexibility means into the public service electricity grid (the “RESP”) that enable the electricity system to be optimized and flexibly managed, especially considering the expected increase in the production and consumption of renewable electricity.”

This incentive is aimed at supporting the installation of at least 500 MW of energy storage capacity in the electricity grid. The installation must be completed by December 31, 2025.

Call for tenders

The call for tenders referred to in the Ordinance was published by the Environmental Fund (FA) on July 31, 2024: Call for Tenders | Investment RP-C21-i08 Grid Flexibility and Storage - AAC 01/C21-i08/2024.

Beneficiaries and type of operation

The eligible entities are public or private legal persons with an economic activity in renewable electricity production.

The only eligible investment operations are those that involve the installation of battery-based electricity storage systems at the scale of the transmission and distribution networks with a nominal power of at least 1 MVA and that ensure the charging and discharging of the battery-based electricity storage systems associated with independent production plants with an installed power greater than 1 MVA, at maximum power for a minimum of two hours, using renewable energy sources connected directly to the RESP. The storage system must be connected to the producing plant “upstream” of the meter of the electricity-producing plant that it is or will be associated with, thus using the same reception point with the RESP, absorbing at least 75% of its energy annually from that installation.

We emphasize that the total initial storage capacity intentions submitted by each applicant may not exceed 20% of the total capacity to be supported under this incentive (i.e., 500 MW). This applies to applicants in a control or group relationship.

Allocation, form and rate of funding

The total amount allocated to this incentive system is €99,750,000.00.

The maximum funding per beneficiary and per project is €30,000,000.00, and the maximum funding rate for operations to be approved is 20% of the total eligible expenses in the form of a non-reimbursable grant.

Eligible expenses include the costs incurred in carrying out the operation, such as those associated with electricity storage systems, the construction or adaptation of infrastructure, and specific technical assistance. Non-eligible expenses include the purchase of land, the purchase of used equipment, operating and maintenance costs, taxes, and fees.

Payments may be made as an advance (capped at 23%), reimbursement or payment of the final balance, and will be processed to the extent that the Environmental Fund has available funds. However, 5% of the total amount will always be conditional on the submission of the final balance payment request and the final report confirming that the operation has been carried out in accordance with the approved terms.

Eligibility and selection criteria for applications

Beneficiaries must meet the following eligibility criteria: i) be legally incorporated, ii) have their tax and social security affairs in order, iii) have a balanced economic and financial situation, iv) not be a distressed company, v) not have salaries in arrears, and vi) not have submitted the same investments in other applications, among others.

Applications must meet the following eligibility criteria: i) comply with the type of operation envisaged, ii) aim to achieve the specific objectives of the RRP, iii) demonstrate an adequate degree of maturity, iv) justify the need and opportunity to carry out the operation, v) submit a technical characterization and justification of the investment costs and the physical and financial implementation schedule, vi) submit a communication plan, and vii) include assessment and monitoring indicators, among others. Beneficiaries must start implementing the operation within a maximum of six months of signing the terms of acceptance with the Environmental Fund.

Deadline for submitting applications

The deadline for submitting applications is 5pm on September 2, 2024. Applications must be submitted to the Environmental Fund using the electronic form available HERE.

We emphasize that applications are classified and ranked up to the budget limit established in the Environmental Fund’s call for tenders in line with the cumulative selection criteria and respective scores stipulated in Annex ii to the Regulation, which consider the beneficiary’s preferred location, maturity and experience.

Practical recommendations for those interested in this incentive

Entities interested in applying for this incentive must take care to meet the deadlines and prepare in advance the elements that prove their eligibility, the project’s maturity, economic and financial viability, contribution to the RRP’s objectives, and compliance with the legal provisions on state aid, public procurement, equal opportunities, gender equality, and others.

They must also ensure that they have the technical, physical and financial means and human resources necessary to carry out the operation, as well as the prior licenses and authorizations for implementing the investments, where applicable.

Finally, they must be aware of the obligations arising from the granting of support, namely as regards publicizing, monitoring, controlling, maintaining, and allocating the supported investments.