Spain-Andorra 220 kV electrical interconnection: who pays and what changes in 2026

Key data

The new 220 kV electrical interconnection between Adrall (Spain) and Andorra changes the usual model for financing electrical infrastructure: it is not the Spanish electrical system that assumes the cost, but the beneficiary country. The agreement, signed in Belém on November 18, 2025 and in force since September 23, 2026, establishes with precision who builds, who pays and how this operation is regulated accounting-wise.

The regulatory reference is BOE-A-2026-20269, published on September 30, 2026. The infrastructure was planned in REE's Network development plan 2021-2026.

What does this agreement establish?

The agreement regulates the construction of a new high-voltage electrical interconnection between the two countries. Obligations and responsibilities are distributed as follows:

The stated objective of the project is to reduce Andorra's energy dependence and advance towards carbon neutrality by 2050. The new 220 kV line represents a qualitative leap compared to existing interconnections, improving the capacity and supply security of the Principality.

Economic and operational impact

The financing mechanism has direct consequences on REE's regulatory accounting and on the Spanish electrical system:

• REE's RAB reduced: The investment financed by FEDA is deducted from REE's regulatory asset base (RAB), in accordance with CNMC Circular 5/2019. This means REE will not be able to recover that investment through the Spanish electricity tariff.
• Remuneration for O&M guaranteed: REE will receive regulated remuneration for the operation and maintenance of the infrastructure in Spanish territory, ensuring recurring income without having disbursed the initial investment.
• No impact on Spanish electricity tariff: Since FEDA finances the works in Spain, the cost is not passed on to Spanish electricity consumers through network access charges.
• Prior private agreement: Payment conditions between REE and FEDA must be formalized in a private agreement before the start of works, which implies a bilateral negotiation process with impact on the treasury planning of both entities.
• Dual circuit in Andorra: FEDA will build a dual 220 kV circuit from the border to the new receiving station at Riu Runer, which represents a significant investment in Andorran infrastructure.

Who does it affect?

• REE (Red Eléctrica de España): Responsible for construction in Spanish territory. Its RAB will be reduced by the investment financed by FEDA, although it maintains remuneration for O&M. Must formalize the private payment agreement with FEDA before start of works.
• FEDA (Forces Elèctriques d'Andorra): Finances the entire cost of works in Spain and builds the infrastructure in Andorran territory (receiving station at Riu Runer and dual 220 kV circuit). It is the actor with the greatest financial exposure in the project.
• CNMC (Comisión Nacional de Mercados y la Competencia): Applies Circular 5/2019 to deduct third-party investment from REE's RAB. Its role is regulatory and supervisory of the accounting treatment of the infrastructure.
• Spanish electrical system: Benefits from a new international interconnection without assuming its investment cost. Improves system security at the Pyrenean border.
• Spanish electricity consumers: Do not assume the investment cost through tariffs, as it is financed by Andorra.
• Energy sector companies with operations at the Pyrenean border: Must monitor project progress to anticipate changes in available interconnection capacity.

Practical example

Suppose REE budgets the construction of the Spanish section of the interconnection at 50 million euros (hypothetical figure, not declared in the agreement). Under the usual scheme, that investment would enter REE's RAB and would be remunerated through the Spanish electricity tariff during the asset's useful life.

With this agreement, the operation is radically different:

1. FEDA pays the 50 M€ to REE in accordance with the private agreement signed before the start of works.
2. The CNMC deducts those 50 M€ from REE's RAB, applying Circular 5/2019.
3. REE does not recover the investment through tariffs, but does receive regulated remuneration for operating and maintaining the line during its useful life.
4. Spanish electricity consumers pay nothing for the construction of this infrastructure.
5. FEDA, for its part, also builds the receiving station at Riu Runer and the dual 220 kV circuit in Andorran territory, assuming that investment as well.

This model is relevant as a precedent: it demonstrates that it is possible to incorporate electrical infrastructure into the Spanish system at no cost to the national consumer, when the main beneficiary is a third party that finances the work.

What should companies do now?

1. REE: Begin negotiations with FEDA to formalize the private agreement on payment conditions before the start of works. Without this agreement, works cannot begin according to the agreement.
2. FEDA: Plan treasury to assume full payment of works in Spanish territory, in addition to its own investment in Andorra (Riu Runer station and dual 220 kV circuit). Coordinate timelines with REE.
3. CNMC: Prepare the procedure for adjusting REE's RAB in accordance with Circular 5/2019, once third-party financing is accredited.
4. Energy companies with interest in the Pyrenean border: Monitor project progress to anticipate changes in available interconnection capacity and access conditions to the network in that area.
5. Regulatory and financial advisors in the electrical sector: Analyze the impact of RAB deduction on REE's valuation and future regulated remuneration, especially in the context of the current regulatory framework.

Official source

Consult complete regulation at official source (BOE-A-2026-20269)

Disclaimer: This article is for informational purposes only and does not constitute legal advice. For specific decisions, consult a qualified professional. Source: https://www.boe.es/diario_boe/txt.php?id=BOE-A-2026-20269