Spain asks Brussels to leave the current electricity price system

  • The Government of Pedro Sánchez presents a new document to the rest of the European partners to act on the prices of electricity, gas and the trading of CO2 emission rights

  • The move comes after the refusal of a dozen member states, led by Germany, the Netherlands and Austria, to reform the electricity market

Despite the explicit rejection of nine EU countries to reform the electricity market, Spain returns to the fray to raise awareness and convince its European partners of the need to urgently introduce “extraordinary & rdquor; that make it possible to stop the rise in electricity prices. On the occasion of Extraordinary Council of EU Energy Ministers held in Luxembourg, the Government has released a new document in which it claims the possibility of unilaterally decoupling prices from the electricity market to limit the electricity bill on its own. “A common European approach for the whole European internal energy market is our preference & rdquor; because “it is the most efficient and reasonable way to avoid additional distortions & rdquor; But if there is no response to the current crisis, the European Commission should allow governments “flexibility to take action in this extraordinary situation,” the document says.

The movement comes after the letter sent by Germany and eight other European countries rejecting the reform of the electricity market and considering the latest proposals from Brussels sufficient. “We understand that the measures presented by the European Commission on October 13 are not enough. We have to continue working on much more ambitious measures. They have to be more ambitious and appropriate to the current context & rdquor ;, the secretary of state for energy responded this Tuesday, Sara Aagesen, who reminded the rest of his colleagues that Spain has already adopted each and every one of the short-term measures proposed by Brussels.

Aagesen, who has replaced the vice president Teresa Ribera who has stayed in Madrid to participate in the Council of Ministers, has defended before the rest of his colleagues the three great blocks in which Spain proposes to act now, in the short term, to redirect the situation and avoid contagion effect that makes electricity prices “unjustifiably more expensive”. For example, each increase of one euro per megawatt hour in the price of gas represents 2.7 billion euros a year in additional electricity costs for European consumers.

Decouple prices

Faced with this situation, and to avoid that this increase in cost is passed on to consumers, Spain has claimed two measures. First, set prices separately. Instead of the pure marginal price signal (polluted by gas price spikes), the price of electricity would be obtained as an average price with reference to the cost of ‘infra-marginal’ clean technologies (particularly renewables). In this way, “the price of electricity would be directly linked to the national production mix, at the same time that it would protect consumers from excessive volatilities and allow them to participate in the benefits provided by a more economical generation mix & rdquor; thanks to renewables.

To control the situation, Spain also advocates establishing a limit price for natural gas. “In this way we would ensure that the marginal price does not exceed these limits that we are having in recent months & rdquor ;, explained the secretary of state who has once again insisted on the need to establish centralized purchases of natural gas, another of the known lawsuits. Finally, Spain also considers it urgent to adopt new measures to avoid financial speculation in the CO2 emissions trading system. “It is something that we are seeing, those high volatilities in CO2 rights that reduce the competitiveness of the industry and our possibility of evolution & rdquor ;, he explained. According to Aagesen, the EU should explore four concepts, including the time limit that these rights can be active or the excess of rights that can be traded.

Northern skepticism

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The document, however, clashes head-on with the position defended by a dozen EU countries that consider that the Brussels measures are sufficient. “Our idea is to convince them with facts, telling them what the real situation is and saying that the energy transition and decarbonisation will only be possible if consumers perceive the benefits of the transition,” the Spanish energy manager insisted. An exercise that the northern European countries continue to view with skepticism. “I think the Spanish government is overpromising by saying that joint gas purchases will solve the crisis. What will solve the crisis are investments in efficiency and what Spain needs more are interconnections & rdquor ;, the Luxembourg minister Claude Turmes has responded.

His country is one of the nine countries that this Monday signed a joint letter – to which Sweden and Belgium could join – in which they indicate that they will not support measures that interfere in the gas and electricity markets. According to the diagnosis of the Luxembourg minister, creating a joint purchasing platform would take years and would pose complex problems such as storage and what Spain needs are more interconnections with continental Europe. “I am very sorry that in 2005, in Barcelona, ​​it was decided to guarantee 10% of interconnections and today that still does not happen. I hope that the European Commission will make new decisions,” he valued during the public debate.

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