Organisational Model of the Spanish Electricity System
The main characteristics of the Spanish electricity sector are the existence of the wholesale Spanish generation market (also referred to as the “Spanish pool”), and the fact that any consumer has been free to choose its supplier since January 1, 2003. Additionally, since 2006, bilateral contracts and the forward market have become a larger part of the market.
Generation facilities in Spain operate either under the Spanish ordinary regime or the Spanish special regime. The electricity system must acquire all electricity offered by special regime generators, which consist of small or renewable energy facilities, at tariffs fixed by Royal Decree or Order that vary depending on the type of generation and are generally higher than Spanish market prices. Ordinary regime generators provide electricity at market prices to the Spanish pool and under bilateral contracts to qualified consumers and other suppliers at agreed prices. Suppliers, including last resort suppliers, and consumers can buy electricity in this pool. Foreign companies may also buy and sell in the Spanish pool.
The market operator and agency responsible for the market’s economic management and bidding process is OMEL. Transmission companies and regulated distributors must provide network access to all consumers that have chosen to be supplied in the free market. However, these consumers must pay an access tariff to the distribution companies if such access is provided.
The electricity transport grid comprises transmission lines, stations, transformers and other electrical equipment with a voltage superior to 220 KV, as well as other facilities, regardless of their voltage, that provide transport or international and extra-peninsular interconnections. Red Eléctrica de España (REE) manages most of the transmission network in Spain. It is responsible for the technical management of the Spanish electricity system as regards developing the high voltage network, in order to guarantee electricity supply and proper coordination between the supply and transmission system, as well as the management of international electricity flows. The system's operator carries out its duties in coordination with the market operator.
Liberalised suppliers are free to set a price for their consumers. The main direct activity costs of these entities are the wholesale market price and the regulated access tariffs to be paid to the distribution companies. Electricity generators and liberalised suppliers or qualified consumers may also engage in bilateral contracts without participating in the wholesale market.
As from July 1, 2009, last resort suppliers, appointed by the Spanish government, supply electricity at a regulated tariff set by the Spanish government to the last resort consumers (low-voltage electricity consumers whose contracted power is less than or equal to 10KW). Since then, distributors cannot supply electricity to consumers.