The third vice president and minister for the Ecological Transition, Teresa Ribera, and her proposal for the reform of the European electricity market grow dwarfs. Up to eight employers in the Spanish energy sector and one Portuguese have conspired against the proposal and considering that an electricity market model based on the centralized purchase of most of the inframarginal energy (generated with renewable, nuclear and hydraulic) price contracts fixed, which could be imposed on the Member States, could affect the market and marketing, “fragmenting the internal market and discouraging the development of the system’s flexibility”.
“The reform of the electricity market must preserve legal certainties for investors and consumers,” they point out in a letter sent to Brussels a day after meeting with Ribera herself and the Secretary of State for Energy, Sara Aagesen. In this sense, they demand that the reform preserve the legal provisions for investors and consumers without allowing retroactive changes that alter the already agreed economic flows or the existing legal framework”, in order to save a climate of confidence in the financial markets.
Ribera defends a design that is based on a “very liquid and transparent” short-term market (daily and intraday), combined with a forward market for energy and services with capacity and flexibility adapted to the particular needs of each Member State. The Executive’s proposal is based on the fact that the regulator contracts with inframarginal power plants in the long term, through contracts for differences (CfDs) at a fixed price and oriented to costs, and introduces capacity markets for plants that offer firm or flexible capacity. , as are the combined cycle.
In this way, Ecological Transition explains that if the price in the daily market is higher than the exercise price, the renewable installation returns the excess to consumers, reducing the average value of that hour. On the contrary, if it is lower, it is the system that would compensate the renewable producer so that they have guaranteed the minimum income. For its part, for the already existing nuclear and hydraulic companies, it proposes CfDs with an incentive for availability, so that they can capture part of the higher income at times when the daily market is more expensive, if they are available. Spain also requests that each Member State be allowed to establish a mandatory regulated remuneration for these two technologies.
Employers are of the opinion that CfDs “should be voluntary for both generation and demand. “Otherwise, an estimate of the costs or payments created by CfDS to all demand may distort the market, the use of PPAs ( Power Purchase Agreement) and commercial activity”, they emphasize in the letter. Regarding the PPAs, they determine that they effectively encourage investment in renewables, “while allowing consumers to reduce the volatility of electricity prices” “It is necessary to promote its development by eliminating existing barriers,” they point out.
The signatory employers are the Association of Electric Power Companies (Aelec), the Association of Representatives in the Electricity Market (Armie), the Association of Independent Producers of Electric Power in Ordinary Regime (Aprie), the Association of Manufacturers of Electrical Equipment (Afbel) of Electric Mobility (Aedive). Also signed by the Portuguese Elecpor.
The reform of the electricity market is the main dilemma now facing the European Union (EU) after saving the cap on the price of gas imports. Spain is the main defender of ending the current marginalist design of the pool, while a coalition of seven countries, led by Germany, demands that the benefits reported by the system in the last decade be maintained and that the climate and climate objectives are not compromised. energy marked by the community executive.
The European Commission (EC) closed on February 13 the public consultation for the possible reform of the market and the European regulators also expressed their opinion. They agree with the Spanish Executive that the use of bidirectional contracts for differences or similar agreements is an “effective way to reduce the impact of short-term markets on the price of electricity and to support investments in new capacities.” However, they call for “careful design” and European harmonization for such contracts through the Commission’s guidelines. What it does not support is imposing its use.
During her speech this Thursday at an event organized by the New Economy Forum, the vice-president commented that the Brussels proposal to reform the market will be announced in mid-March. Likewise, Ribera “has the impression” that she will collect the positions of the different Member States participating in the debate and not only that of Spain.
