ERSE directive | Sines area of high demand

Directive 20-A/2023 of December 29 (“Directive 20-A/2023”) of the Portuguese Energy Services Regulatory Authority (“ERSE”) approves the regulations on allocating grid connection capacity to consumption facilities in the Sines area of high demand.

The directive was published in the Official Gazette of the Republic of Portugal on December 29 and entered into force on the following day, December 30, 2023.

Directive 20-A/2023 was issued following the publication of Decree-Law 80/2023 of September 6 (“Decree-Law 80/2023”), which (i) established a special procedure for allocating grid connection capacity to consumption facilities in high-demand areas, and (ii) recognized the Sines area as one such area.

Before this directive was published, there was an urgent consultation with the national transmission grid (“RNT”) and national distribution grid (“RND”) operators, the Directorate-General for Energy and Geology, consumers, and stakeholders in connection capacity. This consultation was necessary due to the urgency of implementing new strategic industrial investments in the Sines area.

Directive 20-A/2023 establishes the allocation terms and specifies the amount stakeholders must pay to those that provide or assign allocated but unused consumption capacity in the Sines area. After the directive was published, grid operators disclosed the allocated but unused capacity on their websites, reporting 1,316 MVA on the RNT at very high voltage[1] and 152.52 MVA on the RND.[2]

ERSE has set the compensation amount to be paid to holders of facilities connected to the public service electricity grid (RESP) that provide or assign allocated but unused capacity at €0.00268/(kVA/day).This rate is not subject to revision and will also be the reserve price for the auction if the capacity provided or assigned, along with any capacity resulting from grid reinforcements, falls short of meeting the calculated demand.

Based on a proposal from the RNT operator, ERSE will approve the auction documents independently, ordering that the auction and its outcome be announced in accordance with article 10.5 of Decree-Law 80/2023.

Directive 20-A/2023 also defines the time and financial limits for paying compensation to holders of the provided or assigned capacity, as well as the contractual and operating conditions for providing or assigning capacity. It also establishes that the RESP operator, for safety reasons or to guarantee the contractual terms, can interrupt facilities when their power output exceeds the requested or certified capacity.