Brussels Six months after the European Commission president presented his proposal to reform the electricity market this Tuesday, Ursula von der LeyenI will announce. rudely changes are minimal –approach is limited reduce barriers to long-term contracts energy– and outlines some of the measures increase consumer supply contract offers. The approach is much more in line with European electricity employer Eurelectric, which advocates virtually no major changes alongside Germany and seven other countries ‘non-reform’; With Spain’s bid to intervene in the price nuclear and hydraulic power plants avoiding the ‘heavenly blessings’ of these technologies and thus lowering the customer bill.
However, the Spanish government glass half full “welcome” a Community offer “inspired” and includes “majority of solutions proposed by Spain”, According to Ministry of Ecological Transition sources. HE tone change accepts that the country will keep it. Presidency of the Council of the European Union In the second half of 2023, six key months for the negotiation between the Twenty-Sevens to approve a text before the European Parliament elections in mid-2024. The employers of Iberdrola, Endesa and EDP (Aelec) also value the offer “positively” in their division and “does not include structural or retrospective measures of intervention”. These are some of the keys to reform.
What does Brussels offer?
The European Commission basically advocates promoting long-term contracts energybut without editing almost anything. It does this through promotion. Bilateral contracts between power producer and consumer (known in energy jargon as PPA, an acronym for Power Purchase Agreement) offering public assistance to approve these contracts, or developers participating in public tenders (auctions) can set aside a piece for sale through PPAs. Curiously, Spain is the country with the most contracts According to industry sources, most of these types occur between vertically integrated companies (distributor and manufacturer of the same group) unknown whether they pass prices on to customers.
recommends its establishment. prices regulated by auction (called Contracts for Difference) but not limited to new investments renewable energy (something already being done in Spain) and nuclearalso for reinforcing existing ones, what does it support prolonging the useful life of this technology in the future.
“does not include All the same What Member States can’t do now” summarizes Carlos III University Professor of Economics and one of the architects of the Spanish proposal, Natalie Fabra. Spain advocates setting regulated prices for nuclear and hydraulic available, Cutting unexpected profits from these technologies and supporting consumers, although the European Commission acknowledges that these technologies are recording “consistently high revenues”. “We cannot accept that hydraulics can be paid at 200 Euros per megawatt-hour when the cost is 20 Euros per MWh, it is a public resource and they have recovered their investment. “It is scandalous that the commission consented to this,” he said. Fabre adds.
Does the marginalist system continue?
Yes, in September of last year, a few days after the President of the European Commission, Ursula von der LeyenThe head of the Spanish operator OMIE announced that Brussels will implement the reform of the electricity market. carmen becerrilreplaced the High Representative of the European Union, Joseph Borrelcelebrates the end of the “(marginalist) pricing system” in an act. “The electricity market evolve, However Mr. Commissioner will he let me make one bet “To the fact that marginalism will continue after the reform model proposed by the European Commission,” said Becerril at the time. Time has proven him right: the proposal of the European Commission preserves this design and, moreover, in practice this single point which one do you have absolute consensus in Europe, which thinks it is the best way to have objective price reference. “The design of intraday markets, more effective “To ensure that the cheapest technologies are primarily used in electricity generation and to ensure trade between member countries,” he said. kadri simson.
Advocates creating capacity markets without changing existing rules
Another of the issues that the European Commission handles incompletely is, Establishing a capacity market that rewards availability, as well as new plans for Optimize the flexibility of renewable energy demand response mechanisms (reducing consumption for a price during peak hours) and storage. Brussels encourages countries to design capacity mechanisms, but In the current regime, This mechanism is accepted as a tool of last resort that is very difficult to use in practice.
These are two of the issues advocated by the Spanish Government seeking amendment of the Convention. internal market directive for standardize and generalize These services are also advocated by large electricity companies. “We think it is most efficient to use all the resources that can contribute. stiffness or flexibilityby including I demand response and storageintegrated energy markets and capacity mechanismsRather than establishing separate and unharmonized mechanisms that can distinguish between different technologies or resources,” underlines Aelec, the employers’ association of major electricity companies. The European commissioner advocated “an enormous effort” to take them all into account. expressed concerns and encouraged countries to use negotiation to make changes. “With this proposal, the Council can discuss changes that address these national issues beyond what our proposal covers.” Simon added it.
More weight for consumers
Consumers gain some autonomy. This European Commission settings obligation for energy companies offer fixed price ratesIn addition to the users’ right to have multiple offers in the same contract charging the electric car to take advantage of the volatility of daily prices when electricity is cheaper (at night). In Spain, all electricity companies already offer fixed price rates and are even allowed to have two different entitlements since June 2021.
Moreover, the right of consumers to share excess energy without the need to create energy communities that can encourage self-consumption with their neighbors, it can also promote the weight of consumers in government. demand reduction mechanisms Once smart meters are installed, these devices will need to be generalized for this.
Will this reform prevent a new price crisis?
It looks difficult. “Proposed reform will not give a definitive answer to the electricity price crisis Socialist Member of the European Parliament emphasizing that we have suffered since the summer of 2021, Nicholas Gonzalez Casares. The point is that if there is a situation with high prices like in recent months, beyond being established as an exceptional measure, nothing changes from what exists now, they can be detected. adjusted prices for households. “If the price reaches 500 euros and a limit of 100 euros is set, someone has to pay the difference. This is a tariff gap and is not the solution to the problem. The European Commission, electricity companies gain unfair advantage At the expense of the Europeans,” insists the economics professor Natalya Fabra, acknowledges that if the electricity price falls after this reform takes effect, it will be for “external reasons”. “Not with the measures contained in the proposal. exposed to the repetition of history in recent years“, warning.