Last May, the National Commission on Markets and Competition (“CNMC”) issued a proposal (“Proposal”) (DCOOR/DE/006/26) to amend the electricity operating procedures PO 7.4 (Voltage Control Service) and PO 14.4 (Collection Rights and Payment Obligations for System Balancing Services) to promote the dynamic provision of the voltage control service; the public comment period for this proposal ended on May 25.

The Proposal constitutes the second phase of the adaptation of the regulatory framework for the voltage control service and introduces a set of measures aimed at increasing the number of facilities authorized to provide this service, particularly renewable energy facilities based on power electronics and storage systems (i.e., batteries). To this end, the CNMC proposes revising the current remuneration framework and incorporating a new service delivery model based on fixed targets.

This new approach will allow facilities that have the technical capacity to control voltage but do not yet have the necessary systems to receive variable setpoints in real time to move away from the current power factor control regime and begin providing service using a fixed voltage or reactive power setpoint.

The CNMC considers that this approach is easier to implement, facilitates verification of service compliance, and allows for compensation for service provision during hours when the facility does not feed active power into the grid, thereby offsetting the electricity consumption associated with providing the service in the absence of a primary energy source.

From an economic perspective, the Proposal's main innovation is the increase in remuneration for the dynamic service consisting of tracking real-time setpoints:

i. Compensation for reactive energy supplied: It is proposed to increase the rate from 1 €/MVArh to 2 €/MVArh during periods when the facility records positive net generation.

ii. Compensation for hours of zero or negative production (particularly relevant for renewable energy facilities and storage systems): It is proposed that a specific payment indexed to the average daily market price is paid, supplemented by a fixed component intended to cover the costs associated with active energy consumption and the operation of converters.

The Proposal also includes a fixed payment for reactive power availability:

i. Facilities that provide the service through dynamic bidding: It is proposed that they be allowed to receive up to 2.7 €/MW per day, an amount intended to compensate for the investments required to adapt the facilities to this service delivery model.

ii. Facilities that provide the service through fixed storage units: It is proposed that they be allowed to receive 0.7 €/MW per day as compensation for the costs associated with the consumption toll required to provide the service in the absence of generation.

Finally, the Proposal aims to make certain participation requirements more flexible, allowing—among other measures—the joint provision of the service by facilities with a capacity of less than 5 MW and introducing various technical adjustments regarding validation, response times, and service delivery parameters.

Furthermore, the CNMC itself anticipates that this reform will continue through a third phase of revision of PO 7.4, which will address additional modifications to provide the service with greater flexibility and adapt it to the future needs of the electric power system.

Overall, the Proposal aims to align economic incentives with the technical needs of the grid so that renewable technologies and storage can assume greater responsibility for system stability—a role that previously fell to conventional generation.

ALBERTO CHENLO
Associate, Energy

*This article does not constitute legal advice.