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The Cabinet has recently approved the long-awaited new regulation for electricity generated from renewable energy sources. The new regulation aims to promote the use of clean, autochthonous and efficient generating technologies, guarantee an appropriate return on investment and ensure the long-term stability of the legislation, thus enabling investors to plan in the medium and long term.

The Cabinet has recently approved Royal Decree 616/2007, which aims to provide more support to cogeneration in all its forms. The decree also transposes the EU Cogeneration Directive into the Spanish legal system. The decree aims mainly to give the government the tools to analyze and evaluate the potential for high-efficiency cogeneration in Spain.

The quest for the control of Endesa, Spain's largest electric utility company, continues. Following bids by Gas Natural and E.On, Italian company Enel announced its intention to bid for Endesa. In the current situation, each player's intentions will be blocked during shareholders' meetings, which is an incentive to reach a way out through negotiation.

A new regulation which elaborates on the obligations to maintain minimum security stocks and diversify gas supply imposed by the Hydrocarbons Act has come into effect. The new rule also regulates the legal status and operations of the watchdog entrusted with the inspection and control of gas and oil, minimum security stocks and diversification of supply provisioning.

An act has created a special regime for power generation facilities which use technology that contributes to environmental objectives. The regime, which came into force on March 29 2004, is a feed-in system based on regulated incentives which position environmentally efficient technologies competitively in the free market.

Spain and Portugal have signed an international convention for the creation and development of an Iberian power market, MIBEL. MIBEL will be the second cross-border market to be created in Europe, and will be the largest European spot market in terms of volume. Its establishment may herald the construction of an EU common market in the energy sector.

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