Renewable energy PERTE: The invitations to tender are coming and we have to be ready.
Spain is seeking greater strategic autonomy and less external dependence in both energy and technology. This is the philosophy behind the energy PERTE. The beneficiary projects will span the entire value chain, involving small- and medium-sized enterprises. Advising our businesses so they are eligible for these grants is now a priority for Bankinter.
2021 was just a warm-up. We are now starting to receive the funds. It is time to make this real and start receiving the funds in earnest. The coming months are crucial.
Renewable energies: 16.370 billion euros and 280,000 jobs
The Strategic Project for the Recovery and Economic Transformation (PERTE) for Renewable Energies, Renewable Hydrogen and Storage (ERHA) was approved by the Council of Ministers on 14 December. It plans to invest 16.37 billion euros, with the creation of up to 280,000 jobs, both direct and indirect.
- The public sector contribution will be 6.92 billion euros.
- Private investment will contribute 9.45 billion euros.
This is the third PERTE formally presented by the Government, following those for electric vehicles and health. It focuses on one of the core areas for European funds, the Energy Transition and progress towards net-zero carbon by 2050. This is a strategic objective for the EU that will account for 40% of the NextGeneration funds.
Submissions will be invited and projects will be awarded in 2022 and 2023. They are expected to be implemented between 2023 and 2026. The first programmes were launched in a preliminary way in 2021, through four calls worth more than 500 million euros:
- Fostering the value chain for renewable hydrogen.
- Pioneering renewable hydrogen projects.
- R&D projects for energy storage.
- Pilot projects for energy communities.
An orderly timetable: from planning and the legal framework in 2021 to invitations to tender in 2022
The global crisis generated by the pandemic got the European Union into gear in 2020 with the announcement of the largest injection of funds in its history: 672.5 billion euros. 69.5 billion euros will be allocated to Spain as a non-refundable grant under the Next Generation programme. This is how the timetable has progressed since 2020.
- 21 June 2020. The European Council agrees to create the NextGenerationEU programme in response to the coronavirus crisis.
- 27 April 2021. El Gobierno español aprueba el Plan de Recuperación, Transformación y Resiliencia y lo remite a Bruselas.
- 16 June 2021. La Comisión Europea aprueba el plan español y la transferencia de 69.500 millones de euros. El 13 de julio es ratificado por el Ecofin.
- To January 2022. 28 expressions of interest from Spanish economic and business sectors are received.
- Between 13 July and 14 December 2021 The Government approves the first three PERTEs, allocating funds for electric mobility, health and energy.
In parallel, a legal framework has been approved that prepares the ground for the receipt and distribution of funds. These are the regulatory measures that you need to be familiar with in order to understand how the aid for the energy transition will be distributed:
- The Integrated National Energy and Climate Plan 2021-2030 (PNIEC), of 16 March 2021.
- The Climate Change and Energy Transition Law, of 20 May 2021.
- Royal Decrees 23/2020 of 23 June and 960/2020 of 3 November establishing the auction framework.
- Royal Decree Law 17/2019 of 22 November, establishing that the grid connection capacity released by closure of thermal power plants will be allocated to projects that maximise environmental and social benefits.
- The hydrogen, own-consumption and, more recently, offshore wind roadmaps.
Once this regulatory framework is in place, invitations to tender for the aid programmes will be published in 2022 and 2023 at the national and autonomous community level. The tenders will be awarded through competitive tenders.
The 25 transformation project: the time for hydrogen and offshore wind
These are the major strategic projects that Spain needs for its trajectory to net-zero. To alleviate the financing deficit for the most innovative technology projects, in a sector where investment is huge, 25 transformation measures have been launched, backed by 3.558 billion euros of public funds.
- Innovative renewable energy: the budget is 765 million euros of public investment and 600 million euros of private investment.
- Storage, flexibility and new business models: 620 million euros of European funds and 990 million euros from the private sector.
- Renewable hydrogen: the main challenge: 1.555 billion euros of public funds, supplemented by 2.8 billion euros of private investment.
- Fair transition: an injection of 30 million euros of public funds.
- National science, technology and innovation system: public investment of 588 million euros is expected.
The transformation measures cover the entire energy transition process: there will be tenders for a research phase, capacity building, such as manufacture of components in Spain, and projects related to implementation: Marketing and spread of the use of the new technologies and energy sources will be facilitated once their costs have come down.
The assessment criteria consider the focus of the Spanish recovery plan and are specific to the sector, but also pay attention to gender and territorial balance. For example:
- Generation of jobs and impact on equality: many of the 280,000 jobs that are intended to be created will stem from these 25 transformation measures.
- Contribution to a fair transition: it is seeking to structure the country territorially and demographically. For example, it will encourage the revitalisation of mining areas.
- Hugh innovation component: the objective is to put Spain at the forefront in these energy technologies, as it is already in photovoltaic and wind power. Technology partners are required for this.
- Repeatability and scalability: the energy sector as a driver of economic transformation for the entire country.
- Participation of SMEs: by submitting bids through consortiums or individually.
These calls that will be under a competitive tender system. They will probably be coordinated by the Ministry of the Ecological Transition and the Institute for Energy Diversification and Saving (IDAE).
The webinar addressed the technologies most strongly promoted by the PERTE, which will need substantial investment:
- Green hydrogen: the first regulatory terms and conditions have been approved. The PERTE is aiming for the energy to be consumed within a close radius, with advances in storage capacity throughout the country. Ad hoc renewable facilities will be needed to feed the generation of this type of hydrogen, such as photovoltaic and wind power plants, which will also be eligible for subsidies. Renewable hydrogen will have significant impact on maritime, land, road and air mobility.
- Offshore wind power: it is time to start building offshore wind turbines in deeper waters. Spain aims to be a leader in this sector. Its substantial wind and port industries put it in a very strong position for this.
- Onshore wind power: the generators need to be renewed 20 years after the installation of the first of these wind farms. These generators are now five times more powerful than the first ones installed in the Spanish mountains. Those blades need to be recycled and new ones need to be installed. The value chain for this industry is well established in Spain.
The 17 facilitating measures: training, own-consumption and digitalisation
Complementing the transformation measures, these focus on training and seek investment aimed at the demand side. There are 17 facilitating measures in 4 areas of action:
- Energy transition: there will be 2.245 billion euros of public investment and 2.303 billion euros of private investment. Many of the measures are already underway, as is the case with own-consumption of photovoltaic energy.
- Skill-building, vocational training and employment: there will be 496 million euros in public investment.
- Mobility using renewable gases: 80 million euros of public funds will be invested. It is expected that 143 million of private investment will be generated. This involves biogas and green hydrogen for heavy transport.
- Digitalisation: 541 million euros of European funds have been allocated, which will be complemented by 1.614 billion of private investment.
The regulatory terms and conditions have been published for of some these areas, together with the call notices in some cases, such as those for own-consumption of solar energy and battery storage of unused photovoltaic energy.
Although these are included in this PERTE, they are not as competitive as the transformation measures. The own-consumption and storage incentives are already underway and the regulatory terms and conditions for aid for renewable thermal energy have also been issued.
The facilitating measures will not be as centralised in MITECO and it is expected that they will be coordinated with the Transport, Mobility and the Urban Agenda and Industry ministries. Some of these measures will have synergies with other PERTEs, such as electric mobility.
Will the aid thresholds be exceeded?
EU Regulation 651 of 2014 sets the thresholds for aid and subsidies that can be granted within the framework of the Union. It establishes which sectors that can access such public funds and the maximum amount of the aid. What is going to happen with the PERTEs?
As a general rule, eligible projects will be subject to the regulations from seven years ago, which set thresholds of up to 40 or 60% for grant aid. However, these margins may be increased for some projects due to the high levels of investment. The distribution system for NextGeneration funds will set a precedent for the distribution of aid, particularly when seeking an environmental impact on the scale of that of the PERTE for energy.
Can a company bid under the PERTE on its own?
- The vast majority of the European funds under this PERTE are available. The money has not been allocated and, although large consortia are being formed, there is still time to set up a consortium or prepare to bid on your own.
- The PERTE seeks to foster collaboration between companies and the public administrations, and also with technology centres and scientific institutions.
- This is a complex area, so professional advice is essential. That is why Bankinter is working with FI Group to help companies in this process.
The calendar for 2022
The energy PERTE was published in December 2021. The regulatory frameworks and invitations to tender for transformation projects are expected to be issued in the coming months:
- Regulatory basis: the rules of the game for investments and projects. There is a time horizon of 2 to 4 months in which the invitation to tender is expected to be published.
- Invitations to tender: they are likely to give the consortiums and companies 1 to 3 months to prepare their applications. We have to be ready for those 90 days to submit the application.
The roadmap for renewable hydrogen, energy storage R&D projects and pilot projects for energy communities is expected to be published in the short term.
Will there be any more PERTEs?
Three PERTEs have so far been approved in Spain:
- Electric and connected vehicles. The first, which was approved on 13 July 2021, is expected to be worth 24 billion euros.
- Cutting-edge health. Approved on 30 November 2021, with investment of 1.469 billion euros.
- Renewable energies, renewable hydrogen and storage. Approved on 14 December 2021, with total investment of 16.37 billion euros.
Two new PERTEs have been announced and are expected to be approved by the Council of Ministers shortly:
- In Spanish. The new economy of language.
- The social economy of care
Other PERTEs have been sketched out::
- Circular economy. This PERTE will have many synergies with renewable energy.
- A smart and sustainable agrifood chain.
Do you have an energy project?
Contact your mentor if you have a project and want to know if you are eligible for aid under the PERTE. They will help you start the diagnostic process with FI Group. If you are not a customer, write to: firstname.lastname@example.org. We will be delighted to help.
Information from the webinar organised by the Bankinter CFO Forum. With the participation of:
- Emma Montserrat: Head of European Funds. Deputy Assistant Director
- Carlos Fernández Ávila: Energy Strategy Granter at FI Group