Council of Ministers at the first meeting of the year Spain’s proposal to reform the European electricity market. For practical purposes, the purpose of the proposal is to low renewable energy costs noticeable in the pocket of the consumer, enormous volatility of the marginalist market up-to-date and increase security supply. For this, the Ministry of Ecological Transition will defend in Brussels Reducing the current daily market for gas-fired power plants and promoting contracts compulsory for nuclear and hydraulic in the long term, voluntary for renewable energy, as well as creating a new the market where facilities with storage capacity are charged for being available. “We think we have sufficient experience Teresa Ribera, Third Vice-President and Minister for Ecological Transition, on what works at the European level and what the model is.” Council of Ministersaware Spain’s success in energy your last months in spain were not in vain first country When asking the European Commission, Electricity market reform in spring 2021, which Brussels refused several times, but in the end agreed to launch after more than a year and after a war, in September of last year.
Renewable energy
One of the main targets of Europe in energy issues in the coming years, renewable penetration In line with the decarbonisation targets for 2050. Some of these technologies minimum expensesThe Spanish Government plans to promote futures contract of this type of energy Between the electrical system as a whole and the manufacturers. about something similar to existing renewable tenders The executive commits to purchase some energy from developers at a fixed price over a period of time. a long time, about 10 or 12 years. In this way, it is ensured that the majority of the energy entering the system has a fixed price.
nuclear and hydraulic
In the case of nuclear and hydropowerbig ones drew attention to this price crisis, The idea is the same as for renewable energy, but instead of voluntarily changing the market from short-term to long-term, the Government wants it to be mandatory. These technologies benefit from the high prices set by the company. marginal market –in this case gas– but without having costs owning plants that burn gas to generate electricity. Although Spanish companies have confirmed that the entire generation is hired, the Government is calling the difference ‘benefits from heaven’. term and is not part of the marginal market, meaning it does not benefit from these additional revenues. However, in most cases these contracts are as follows: counterparty of a merchant from him same energy group To put an end to this practice, the Government proposes to force these factories to sign long-term contracts at a regulated price, that is, these contracts be concluded with the regulator (Government or CNMC) rather than the regulator (Government or CNMC). Companies that consume this energy. There will be a mechanism similar to renewable auctions, but compulsory. necessary for this amending the european internal market directivebecause right now a free market system. Moreover, hydraulicthe ability to decide when to produce, Incentive to produce during peak hours (therefore, there is a shortage).
The rest: gas, coal…
This other edge technologies aspect gas or coal It will continue to work fully. daily markets without prejudice to the establishment of forward contracts between generators and marketers. Thus, in the case of Spain, ideally gas (combined cycles and cogeneration) according to this formula designed by the Government technologies available only in the current wholesale market. In this way, there is only a small amount of energy to be compensated by a variable price that varies with the market, while the remaining technologies long-term stable prices (at least 10 years).
capacity markets
while keeping the minimum short term market (by gas) and if a new long-term market is created (arranged renewable, nuclear and hydraulic contracts), the Executive proposes to design another in parallel. In what capacity is it negotiatedinstead of energy. So in which give back to technologies storage and thus the ability to decide when to produce energy and when not to produce such as hydroelectric pumping, batteries or combined cycles, because these available when needed. Such services are already available under current European regulation, but as a last resort and what the Spanish Government proposes, to modernize the internal electricity market directive with standardize These services In this way, another problem, which is the introduction of new solutions such as electric batteries, is solved.
What is the government looking for?
According to the logic of the execution, the result is more favorable prices existing ones — that an increase in gas or CO2 emissions rights will not affect other technologies — and also more stable –only a small amount of energy will be determined by the market price–. “It is possible no immediate effects It could cause a significant drop in prices, but it will gradually reduce volatility significantly over time,” Ribera warned. large inputs of renewable energy. “We think it is the best response to address the current design that is not ready for the challenges of the future or the stressful situations of recent months,” the vice president added.