Government approved more than 1,400 million for cogeneration, biomass and waste | Companies

The government has published a ministerial order that updates the methodology for calculating remuneration for the operation of cogeneration, biomass and waste facilities, and also updates the values ​​corresponding to the first half of 2024, according to which remuneration of more than 1.4 is recognized. billion euros this year. Thus, the technology remuneration is calculated at this amount based on power production similar to 2021 and 2022 and taking into account the investment and operation remuneration, sources in the Ministry of Ecological Transition said.

In particular, about 45 million euros will be allocated for biomass; cogeneration of 975 million euros and return on investment of approximately 400 million euros. Ministry sources led by Teresa Ribera indicated that, generally speaking, the remuneration for the operation will be reviewed every quarter, taking into account fuel prices, CO2 rights and the electricity market. In addition, futures market quotes will be taken into account. They also believe the new methodology will make it easier for businesses to improve their economic forecasts “as it more accurately reflects the sector’s revenue and cost structure, so they can make decisions with greater confidence.”

Until now, for example, the price of gas was revised every six months, and the price of electricity was assessed every three years. These are regulated businesses and every three years the income they received was reviewed and adjusted up or down so that they had a set profitability, but this could cause problems with the treasury. Now this can be avoided with the help of short-term reviews, the ministry believes.

Cogeneration, a sector that accounts for 20% of Spain’s industrial GDP in industries such as food, chemicals, paper, ceramics, textiles and automotive, has been eagerly awaiting the unveiling of this new methodology for regulated remuneration for its activities. Another request from the industry to the government is to set a date so that the 1,200 MW auctions, which will be delayed for two years, can be held in 2024. In particular, they estimate that these auctions will mobilize between 800 and 1,000 million euros so that the sector can continue the process of switching to factories.

Cogenerators welcomed the publication of an order establishing a methodology for updating remuneration for the operation of cogeneration plants, waste and biomass facilities, as it represents a “major structural achievement that will provide certainty and enable improved governance in more than 600 industries, mainly SMEs” ” In a statement, the Spanish Cogeneration Association (Acogen) said the system, which replaces the 2015 system, will update prices in the electricity, fuel and CO2 markets on a quarterly basis, “enabling integrated management of energy and industrial production.”

In addition, he believes that with the publication of the new methodology, “the necessary condition for the implementation of the sectoral investment framework” is met through auctions for 1,200 MW of cogeneration, which will be carried out over two years. He therefore emphasizes that “the countdown thus begins” for the announcement of an investment program expected by hundreds of industries and amounting to more than 800 million euros to strengthen production in Spain.

Thus, cogeneration producers hope that the ministry will “complete in a few weeks” the investment program already announced and processed in 2022, and will announce an investment competition in which about 200 industries will be able to take part, “since 25% of cogeneration will no longer receive regulated remuneration upon reaching the end of its useful life, and this percentage will rise to 40% in two years, which could lead to a serious decline in the industry,” they emphasized.

Some industries have already calculated the impact of the new compensation methodology. This is the case for Ence Energía y Celulosa, whose revenues in 2024 are estimated at 62 million euros (based on energy finally produced for the year) compared to what it would have produced under the previous regulation, the company said. In particular, this provision will apply from January 1, 2024, with retroactive effect from both an accounting and cash point of view.

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