Aid for thermal renewables in different sectors of the economy (RD 1124/2021)

Recently, Royal Decree 1124/2021 of December 21 was published in the Official State Gazette (Wednesday, December 22, 2021), approving the direct granting to the autonomous communities and the cities of Ceuta and Melilla of aid for the execution of incentive programs for the implementation of thermal renewable energy facilities in different sectors of the economy, within the framework of the Recovery, Transformation and Resilience Plan.

Characteristics of the Incentive Programs

• Territorialized line:

1. Direct granting of aid to the Autonomous Communities.
2. Autonomous Communities responsible for the management and publication of
   the Autonomous Communities.

• Simple concurrence aid system.
• Effective period: December 31, 2023.
• Deadlines and management objectives of the Autonomous Communities.

The IDAE is the competent body to coordinate and monitor the incentive programs.

Target

To establish the regulatory bases for the direct granting of aid to the Autonomous Communities and cities of Ceuta and Melilla, as well as the approval of two (2) incentive programs:

• Incentive Program 1:
  Implementation of thermal renewable energy installations in the industrial, agricultural, service and other sectors of the economy, including the residential sector.
• Incentive Program 2:
  Implementation of thermal renewable energy installations in non-residential buildings, public sector establishments and infrastructures.

Purpose

Promote the deployment and incorporation of thermal renewable energies in the different sectors of society, so that they contribute to the achievement of the objective of decarbonization of the economy and the consolidation of its competitiveness in the market.

Budget by Autonomous Community

Milestones and Objectives by Autonomous Communities

Final recipients of the Grants

Incentive Program 1. Subjects that carry out an economic activity by which they offer goods or services in the market.

• Individuals.
• Legal entities.
• Any entity of the institutional public sector of any Public Administration, as provided in Article 2.2 of the LRJSP, as well as private law entities or private non-profit organizations.
• Groupings, associations, consortiums or any other form of collaboration, with or without legal personality.

Incentive Program 2. Subjects that do NOT carry out an economic activity by which they offer goods or services in the market.

• The local territorial entities provided for in Article 3 of Law 7/1985, of April 2, 1985, regulating the Bases of the Local Regime, legally constituted and endowed with their own legal personality (City Councils, Provincial Councils, Commonwealths, Island Councils and Councils, etc.).
• Any entity of the institutional public sector of any Public Administration, according to article 2.2 of the LRJSP, as well as private law entities or private non-profit organizations.
• Groupings, associations, consortiums or any other form of collaboration, with or without legal personality.

Eligible actions

New renewable thermal installations, extensions and replacements of existing production systems that supply any of the following applications (as a guideline and not limited to):

• Thermal applications for heat and/or cold production in buildings.
• Low, medium and high temperature applications in production processes and other thermal applications.

The renewable thermal technologies included are solar thermal, biomass, geothermal, hydrothermal or aerothermal. Also considered eligible actions are microgrids of district heating and/or cooling, whose maximum aid will be applied on the first MW of power of the production facility and/or the first MW of power in exchange.

Technical Requirements – DNSH (Do Not Mean Harm) Principle

General technical requirements

1. Monitoring

All installations must have a system for monitoring the thermal energy produced. Except
Biomass local heating appliances.

The functionalities of this system will be:

• Show renewable energy production, in daily, monthly and annual terms.
• You will be able to display additional data such as CO2 emissions avoided and economic savings generated.
• Visible screen showing this data for installations with a capacity of more than 70 kW or more than 14 kW for solar thermal technology, and for installations with a capacity of less than 70 kW, the data will be accessed through one of the equipment of the renewable installation.
• This same information can be accessed through a mobile device or web application.

2. RITE Compliance (RD 178/2021)

Investment projects in installations whose main equipment is not new or has not been previously used are not eligible for aid.

Specific technical requirements

Biomass:

• The actions must achieve a GHG reduction of at least 80%.
• It will comply with the sustainability criteria established in the 2018/2001 EU Directive.
• Actions that include local heating appliances or boilers of less than 1 MW:
  – Accreditation by the equipment manufacturer of compliance with seasonal energy efficiency and emissions requirements for the fuel to be used, which may not be less demanding than those defined in the Ecodesign Regulation in force.
  – Maintain a documentary record for 5 years, which allows accrediting that the fuel used has a certificate of compliance with class A1 from an accredited entity.
  – All equipment must have a preventive maintenance program and an energy management program in accordance with the provisions of the RITE.
• Emissions from facilities between 1 MW and 50 MW must comply with the requirements established in RD 1042/2017, of December 22, on the limitation of emissions into the atmosphere of certain pollutants from medium combustion facilities.

Incentive character

For ELIGIBILITY purposes, only performances with:

Incentive program 1

After the date of registration of the aid application.

Incentive program 2

After the date of publication in the BOE (December 23, 2021).

PREPARATORY actions, ALWAYS after the entry into force of RD 1124/2021:

• Project, technical reports or certificates.
• Exploratory drilling and TRT for geothermal energy.

Eligible costs

a) Investment in equipment and materials.
b) The costs of execution of the works and/or installations.
c) Electromechanical, hydraulic, control and auxiliary equipment.
d) Management, active control and monitoring systems.
e) Civil works, those necessary for the correct execution of the project.
f) The interior distribution and terminal equipment in heat pump installations, provided that high efficiency terminals such as low temperature radiators, radiant floor heating or ventilation with vectors are installed.
g) The cost of dismantling the existing facilities at the site.
h) The costs of drafting projects or technical reports related to the types of actions.
i) The costs of the facultative management.
j) Health and Safety Coordination of the work and assembly related to the types of actions that are the object of the aid.
k) The costs of processing the application for aid, including the drafting of reports and other documentation required for the application.
l) The management costs of justifying the implementation of the actions.
m) The auditor’s report on the supporting account.
n) Other items that are duly justified as necessary (auxiliary or not) specific to each type of action.

Documentation

Solucitud

• Copy of NIF/NIE.
• Responsible statement.
• Justification of the DNSH principle
• Application for assistance.
• Budget.
• Strategic Plan (P>100kW)
• Project.

Justification

• Supporting reports.
• Certificates of completion.
• Project.
• Photo report
• List of invoices and their corresponding bank payment receipts.
• Certificates issued by the Tax Administration and by the Social Security Administration to prove compliance with tax and Social Security obligations.

Strategic plan

For all programs, provided that the rated power exceeds 100 kW, a report shall be provided indicating:

Strategic plan:

• Origin or place of manufacture (national, European or international) of the components of the
  installation.
• Environmental impact, including storage.
• Quality or durability criteria used to select the different components.
• Interoperability of the facility or its potential to provide services to the system.
• Tractor effect on SMEs and the self-employed expected.
• Estimates of the impact on local employment and on the industrial value chain.

2. Summary report for accreditation of compliance with the recovery of 70% of construction and demolition waste generated in civil works carried out, which must include:

• Total amount of waste generated (classified by LER).
• Certificates from the destination managers, indicating the percentage of recovery achieved.
• Non-recoverable hazardous waste will not be taken into account.

Eligible costs

Incentive program 1

The eligible cost shall be equal to the eligible cost discounted by the cost of the equivalent installation, in application of Article 41.6 b) of Regulation (EU) 651/2014.
For the calculation of the aid, it will be determined on the basis of the unit eligible cost of the thermal production installation, Csu, which will be calculated by means of the following expression:

Csu =Ceu – Cuf

• Ceu: Eligible unit cost of the production facility, in €/kW, obtained by dividing the total eligible cost according to Annex AI.2 by the production power actually installed (Ps).
• Cuf: Unit cost of the reference installation in €/kW (according to table).

The unit eligible cost obtained by the formula (Csu) will be limited by the maximum eligible cost (Csum) in the table.

Total eligible cost (€) = Csu x Ps

Eligible Costs (Annex I)

Incentive program 1

In the particular case of hybridization of thermal production plants that share several types of performance, the calculation of the maximum unit eligible cost of the combination of technologies will be established as follows:

• Pi: the nominal power of the thermal production equipment corresponding to the renewable technology part of the installation “i”.
• Csui: the maximum unit eligible cost of the installations of renewable technology “i” according to the table Eligible actions by renewable technology.

For district heating and/or cooling microgrids, the total eligible cost of the installation will include the sum of the eligible cost of the thermal production plant of the corresponding technology plus the eligible cost of the distribution network and exchange or extension substation, up to 1 MW of maximum power in production and/or exchange, according to the following formula:

CsuT = CsuA x PA + CsuG x PG + CsuST x PST + CsuB x PB+ CsuR x PR

Incentive program 2

The eligible cost will be equal to the eligible cost, since the public sector is not subject to state aid regulations. Therefore, the unit eligible cost of the thermal production facility, Csu, will be:

Csu =Ceu

The unit eligible cost obtained by the formula (Csu) will be limited by the maximum eligible cost (Csum) in the table.

Total eligible cost (€) = Csu x Ps

Amount of aid (Annex III)

The amount of the aid to be granted will be the sum of the Basic Aid and the Additional Aid:

1. Basic support

• Program 1

35% eligible cost for all eligible actions, which will be increased for small and medium-sized companies:

• Program 2

70% of the eligible cost for all eligible actions.

1. Additional help

The applicable aid percentage will be increased by 5 percentage points when the actions are carried out in Demographic Challenge municipalities.

Demographically challenged municipalities are municipalities with up to 5,000 inhabitants and non-urban municipalities with up to 20,000 inhabitants in which all their singular population entities have up to 5,000 inhabitants.