Retroactive Refund Of State Grants For Renewable Energy Generation With Feed-In Tariffs

Author:Ms Ana Oliveira Rocha and Diogo Duarte Campos

Order no. 268-B/2016, of 13 October, issued by the Secretary of State for Energy entered into force on 14 October and is highly detrimental to those private investors who have benefited from state grants over the years.

This legislation imposes, with immediate effect, an obligation for power plants benefiting (or having benefited) from guaranteed remuneration for energy generated from renewable sources supplied to the public grid (known as «feed-in-tariffs») to refund to the Portuguese State part of amounts received to the extent they also benefited from other types of state grants (or incentives) to promote and develop projects to generate power from renewable energy, including cogeneration.

The reasoning behind this Order is that state grants should not have been received cumulatively with the guaranteed remuneration referred to above. As a result, the intention of the Portuguese State is that amounts received in excess should be paid back through the Last Resort Supplier ("LRS»). This supposed excess is to take effect in the upcoming 2017 tariff period.

The need for this «offsetting» is based on the Government's aim to lower the electricity consumption bill and the tariff deficit of the National Electric System («NES») linked to the extra costs incurred by this sector, including the costs arising from tariff incentives to generators, with a view to achieving greater sustainability of the NES.

Nonetheless, several doubts arise from this Governmental Order, such as:

Which (cumulative) state grants are covered? What is the legal basis behind the requests to refund the incentives? How far back will the Government go regarding cumulative incentives? Exactly how will the adjustment of the excess amounts be processed? When will the obligation to refund the amounts in excess (even if through offsetting) be due by generators? The DGEG -...

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