The Spanish government unblocks 17.9 billion euros to improve the electricity grid

MadridThe Council of Ministers has approved this Tuesday a decree authorizing electricity companies to make an additional investment of 17.9 billion euros until 2030 to strengthen electricity transport and distribution networks, with the aim of electrifying the economy and facilitating the connection of new industrial, residential, and electric mobility projects.

The annual investment in electricity networks charged to the electricity system itself was previously limited to 0.065% of gross domestic product (GDP, the indicator that measures the size of an economy) for transport and 0.13% of GDP for distribution. "These limits have proven insufficient to meet the needs of the energy transition and the high volume of access requests for new demands," indicated the Ministry for Ecological Transition in a statement. The proposal, in fact, was already put forward in September last year by the third vice-president and head of this department, Sara Aagesen.

Specifically, up to 10.2 billion euros can be invested in distribution networks: 1.02 billion in 2027, 2.55 billion in 2028, 3.06 billion in 2029, and 3.57 billion in 2030. Up to 7.7 billion euros can be invested in transport networks, depending on the planning finally approved by the Spanish government, distributed as follows: 700 million in 2027, 1.85 billion in 2028, 2.3 billion in 2029, and 2.85 billion in 2030.

"Taking into account also the permanent investments, limited by annual GDP, the total expenditure on electricity networks may exceed 35 billion euros until the end of the decade," highlight from the executive chaired by Pedro Sánchez.

Complaints of "saturation"

For some time now, the main electricity companies have been denouncing a "saturation" of the electricity grid. This collapse, in their opinion, is hindering millionaire industrial investments: from data centers to charging points for electric cars due to the lack of grid access capacity. For this reason, they have urged to strengthen and modernize it and, therefore, to be able to have a free hand to invest more.

The big taboo behind this millionaire investment is the cost for the final consumer. The Spanish government argues that connecting new users will allow the total costs of the grids to be distributed among a wider base of consumers and will reduce the tolls passed on to customers' final bills. The new framework, however, also includes more demands for transparency and control over the investment plans of distribution companies and even penalties are contemplated in case of non-compliance with these plans.