Spain has been increasing its electricity exports to France for months and has set several consecutive records in energy shipments to the neighboring country amid an energy crisis. More than half of the French nuclear power plant fleet is out of operation due to maintenance and corrosion issues that make the urgent need to import electricity from the French market to secure supply.
The electricity interconnections connecting the two countries are squeezing their capacity to bring energy to France, which has been running at the limit 99% of all hours for the past two months, amid France’s nuclear shutdown and at a time when the price of electricity is soaring. In Spain, well below the level recorded by the French market, thanks to the impact of the ‘Iberian exception’ in recent months, Mechanism that sets the maximum price for gas used to generate electricity in Spain, since mid-June, in order to lower the price of other production technologies. Below the current ceiling is a mechanism that is temporarily ineffective due to the low gas price in Spain.
The record electricity exports to France and the increasing price difference between the two markets are causing the rates that electricity companies have to pay to use international interconnections also skyrocket. So called congestion rents are calculated precisely according to the amount of energy transported by international cables and the price difference. electricity between the two countries.
Millionaire Response
The more electricity transported and the greater the price difference between the two markets, the greater the income divided equally between Spain and France. Until the ‘Iberian exception’ came into effect, the congestion revenues corresponding to Spain were used entirely to finance the costs of access fees for Spanish electricity grids.
But four months The government allows a portion of these revenues to be allocated directly to pay the compensation received by the gas plants for the ‘Iberian exception’. (these power plants charge the electricity they produce according to the real price of natural gas, without the limit of other technologies, so that they are not damaged) and thus it is possible to reduce their impact on electrical energy. The price of electricity paid by Spanish consumers.
More than half of the more than 700 million euros of traffic jam revenue Spain has received since the gas cap was put into operation, reduce the cost of compensation to gas power plants and thus lower the final price of electricity in the Spanish market. Specifically, between 15 June and 17 October, 414 million injected from congestion rents According to the Ministry of Ecological Transition records accessed by El Periódico de España from the Prensa Ibérica group, reducing the adjustment to compensate gas plants.
The estimate taken up by the government is that using these congestion rents to finance part of the tuning of gas power plants makes it possible to reduce the cost of this compensation paid by demand exposed to the development of the electricity market. electricity and direct consumers entering the market) at 7.5 euros per megawatt hour (MWh) in these four months, increasing from the arithmetic average of 114 to 106.5 euros per MWh.
Last customer pays
The capacity to use interconnections is awarded through annual, monthly and daily auctions, in which companies that can be both electricity exporters and importers influence the electricity price in exchange for the cost incurred to use the networks between them. . both countries. But in the end heThose who bear this cost are the final consumers of the electricity importing country. and in recent months they have had French customers, as the electricity sector has confirmed.
French consumers benefit from the lower price recorded by the Spanish electricity market through these exports, and also because Spanish customers do not pay the gas-powered electricity companies the compensation they pay to cover their real costs. But they cover a large part of these costs from congestion rents, which are used in part to reduce the cost of this compensation to gas power plants.
PP criticizes ‘The Iberian exception to subsidize cheaper energy to French consumers, and gas plants are used more to meet the demand for extra electricity to meet the boom in exports to France, and the price of compensation adjustment is raised.
The government, on the contrary, ‘Stressing that the Iberian exemption works, within four months of the Iberian exemption coming into effect – on 15 June, Spanish consumers saved 2,900 million euros because it managed to control the price of the wholesale electricity market despite the compensation paid to the gas power plants. This 2,900 million includes the 414 million that are used to reduce the adjustment cost of gas power plants from congestion rents.