Spain is accelerating its pace to reinforce and modernize its electrical networks in the midst of a race to electrify industry, attract data centers and absorb new housing. The Government has announced a temporary increase in the annual investment limit in transportation and distribution (an additional 62%) and plans to mobilize close to 34 billion in five years; At the same time, the CNMC proposes a Financial Remuneration Rate (FRR) of 6.58% for 2026-2031, below what the sector demands, which warns of a brake on investment if the regulatory equation does not improve.
The CNMC has closed its latest TRF proposal at 6.58% for transport and distribution networks in 2026-2031 (after a previous draft of 6.46%) and has brought to hearing the methodological circulars that will mark the remuneration for the next six years. The electricity companies consider that the level is still short compared to their cost of capital and European references.
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In parallel, Ecological Transition has opened the investment tap and is working on a royal decree that temporarily raises the limits, going from 0.065% of GDP in transport and 0.13% in distribution to a level 62% higher overall over the next few years, with the aim of unblocking projects and alleviating network saturation.
Urgency for a network to the limit
The capacity maps published by the distributors show saturation in 83.4% of the nodes of the distribution network, which is slowing down new demand connections (from gigafactories to data centers) and forcing infrastructure to be expanded and digitalized.
Beyond the percentage of profitability, the remuneration model incorporates a key parameter, which is the maximum investment cost recognized per client. The latest CNMC text places it at €257/kW (compared to €232/kW in the previous draft). The sector replies that the real cost is around €375/kW, so many projects would be left out if they exceed that threshold.
According to the CNMC itself, with a TRF of around 6.5% and without doubling the investment rate, the annual effect on the system’s costs would be contained. If the capex doubles to meet electrification objectives, the regulated weight will grow, but the regulator defends that it remains within acceptable margins for receipt. The sector, on the other hand, warns that without “bankable” remuneration and realistic unit cost parameters, the connection of new demand will slow down. (Aelec’s allegations).