Teléfono +34 955 320 603 / +34 955 320 607 | Twitter Linkedin |

The choice of the Asset Manager in the management of Interconnection Factilities for Powerplants

In a previous post we began with a series of publications that aims to address an essential aspect in the new reality of the current electricity market: those known as evacuation nodes.

As we already saw, we call evacuation node those elements (lines and substations, mainly) whose essential function is none other than to evacuate the energy generated by various Electricity Generation Facilities (IGE) belonging to different promoters to the same point of connection to the electrical grid (either in Transport or in Distribution system).

Connection nodes: the necessary coexistence of private and common facilities.

The reality of evacuation nodes implies, therefore, the coexistence of two types of infrastructure with a different ownership regime:

  • Private IGEs.
  • Common Evacuation Facilities (ICEs)

To date, in authorized smaller installations, among others, under the umbrella of the R.D. 661/2007 or the R.D. 1578/2008, this duality between infrastructures was hardly relevant given the configuration of both the IGEs and the ICEs. This meant that the SPV created ad hoc for the development of the project in question assumed administrative and commercial ownership of both the IGE and the evacuation infrastructure, which implied, in practice, full autonomy to decide all aspects related to its design, financing, construction and operation.

However, the reality today has changed diametrically due to the obligation imposed by article 123 of the R.D. 1955/2000, of December 1st (in the wording given by Royal Decree 1183/2020) so that the promoters find themselves in a situation that, until now, had been foreign to them: the need to reach an agreement with others promoters (each with their own interests) for the management of ICEs that are essential for the evacuation of the energy generated by the private IGE, which is what provides them with income to, among other circumstances, be able to pay the financing of the projects.

Legal instruments for the management of evacuation nodes.

Faced with this reality, promoters (with greater or lesser conviction, but always with legal obligation) use various legal instruments aimed at organizing, in an orderly manner, both the processing and exploitation of the ICEs, in parallel to that of their own IGEs, since we cannot forget that the capital of each promoter for the development of both infrastructures comes from the same Project Finance of the private IGE and requires the appropriate instruments to provide comfort to the financial entity.

Well, since things usually go slowly, these instruments require a long and cumbersome negotiation process that usually has three main stages:

First stage.- Initial processing of permits, licenses and authorizations of the ICEs.-

Given the non-existence at that time of a company common to all the promoters that must assume such an obligation, it is attributed to one of the exclusive promoters with the pertinent control rules and their consequent responsibility.

Second stage.- Shareholders’ agreement.-

The shareholders’ agreement is the true backbone document of the relationships between the different promoters, always taking precedence over the statutes of the company that is created.

It includes the basic principles that must govern each of the relevant aspects of the ICEs (design, promotion, financing, construction, operation, exits and entries of partners…) and to which they must be subject.

Third stage.- Creation of a common company for all promoters.-

This company is the one that will assume, after the completion of the administrative processing procedure, the ownership of the ICEs for all purposes (administrative, commercial and economic).

The management of ICEs.- The Asset Manager

The relevance that ICEs have for all promoters and the need to reach consensus in their daily management entails the need to outsource the Asset Management service to a third party that assumes the function in a professional yet impartial manner, safeguarding the interests of each and every one of the promoters in compliance with what was agreed upon by them in the previous legal instruments.

There is no doubt about the necessary impartiality given that the promoters have common but, at the same time, differentiated interests, since their ultimate goal is nothing more than to extract the maximum performance from their IGEs at the lowest possible cost in terms of the ICEs, without forgetting that the business strategies of each group present in the node can diverge enormously and without forgetting the possible suspicions between the partners, the result of conflicting interests in the node and in other areas where they converge.

In the same way, the qualification of the Asset Manager is also evident, since it must be an entity with the means, knowledge and experience necessary in the electricity sector in order to fully respond to all the challenges involved in processing, construction and the exploitation of the ICEs, as well as the interests of each of the promoters. Consequently, the need for specialization is imposed given the extraordinary complexity of a sector as relevant as the electrical sector.

Precisely aBalados, as an entity in charge of the comprehensive management of photovoltaic assets for almost 15 years, is a good example by complying with all the budgets necessary to assume the function of Asset Manager and which, of course, can be projected to any type of evacuation node. Namely:

A technical department made up of both engineers and field technicians who are perfectly familiar with the ins and outs of the construction, operation and maintenance of the energy facilities involved in the nodes, that is, generation facilities and evacuation facilities.

This type of professionals must understand and comprehend the specificities of the facilities and the projects in which they are reflected, and must also attend to all the promoting partners in making decisions that affect the peaceful exploitation of the proprietary IGEs in such relevant issues. such as, among others:

  • The dialogue with the managers of the Grid in which access and connection permits have been obtained at the time of launching the ICEs.
  • The dialogue with the EPC and O&M Contractors of both IGEs and ICEs at the time of connection of each of the facilities and scheduled maintenance.
  • Supervision of the work of EPC and O&M Contractors to control proper compliance with signed agreements.
  • The design and application of the ICE’s exploitation regulations in the interest of all promoters…

A legal department that speaks the same language as the promoters and, therefore, has the knowledge and experience in the sector to, for example:

  • Be able to advise during the processing of permits, licenses and authorizations for infrastructure.
  • Supervise and execute the application of the commercial agreements reached by the promoters.
  • Assume corporate management in the adoption of agreements both in general meetings and in the administrative bodies (generally councils with representation proportional to the power of the promoters’ private facilities) of the evacuation node company.
  • Advise partners on legal issues that the day-to-day work of Asset Management may entail: commercial modification of processing agreements, partners’ agreements, corporate bylaws, possible legal disputes…

An accounting and tax department that understands the particularity of both the financing of energy installations and the commercial relationships between the partners, the common company and its suppliers:

  • In the relationships between the partners, it is necessary to coordinate their respective accounting and tax departments in order to reach consensus on the best way to direct the funds they contribute for the management of the ICEs, in order to fiscally maximize their investments.
  • In the relations between the partners and the company of the evacuation node, offer the best accounting and tax solutions to meet the financing of the ICEs, especially when we are more than just dealing with pure commercial companies, we are dealing with companies with a commercial form and with a spirit of spending communities, since, on the one hand, obtaining the necessary funds to undertake any action comes directly from the partners (who, in turn, obtain it from financial entities) and, on the other, it is intended to exist, always and in any case, a parity between income and expenses without any type of distributable benefit.
  • In relationships with suppliers and administrations, manage payments of both the contracts signed on the ICEs and taxes, fees and any type of levy.

Finally, in addition to the arguments mentioned above, the very idiosyncrasy of the daily management of this type of nodes is what imposes the presence of professionals in the indicated areas, given that said management entails inclusion in meetings, email chains and taking of decisions by professionals from the same fields in each of the SPVs that make up the evacuation node, so that a poor service would be provided if the Asset Manager does not have professionals from the same fields, with the same knowledge and of the same value as those that make up the energy groups that own the private SPVs.

In subsequent posts we will explain interesting aspects of the way in which these evacuation nodes are managed daily and the solutions offered by aBalados to its clients in all the nodes in which it takes part.