Iberdrola and Endesa, against the Ribera reform: “It will affect investments”

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The electric companies once again charge against the ideas of the third vice president and minister for the Ecological Transition, Teresa Ribera. The employers’ association of the sector, Aelec, warns that the proposal that the Government has sent to Brussels for the reform of the electricity market “opens the door to various far-reaching modifications that could put The free market in the electricity sector is in dangerdefended in Europe in the last decades”.

Two days after Ribera explained his proposal at the press conference after the Council of Ministers, Aelec, which brings together Iberdrola, Endesa and EDP, is blunt: “This proposal may increase regulatory uncertainty and affect the investments that the sector has to carry out to execute the urgent energy transition. The economic impacts that the reform brings with it in its implementation are unknown.

Spain advocates a design of the electricity market that is based on a “very liquid and transparent” short-term pool (daily and intraday), combined with a forward market for energy and capacity and flexibility services adapted to the particular needs of each Member State.

Sources from the department headed by Teresa Ribera emphasize that, in a context of high volatility in electricity prices, term instruments that provide stable income for infra-marginal producers, as well as affordable and little changing prices for consumers. In this sense, from the association they emphasize that more than 70% of the energy of Spanish companies is already sold. They thus ensure that the electric companies are not charging wholesale market prices.

Little harmony between the sector and the Government

“It is important to carry out a cost-benefit analysis of the implications that the proposed electricity market reform has for the operators of the sector in order not to harm the investments and expansion plans that are already committed. Likewise, it is necessary to highlight that The Spanish electricity sector has been signing the cheapest PPAs – power purchase and sale agreements – in Europewhich positively impacts the economy and Spanish society, as well as the sustainability of the environment”, they indicate from the employers’ association.

Aelec also hints that the Executive has not had your opinion when preparing the proposal that has been sent to the Commission and offers its “full collaboration” in order to “define an electricity market in accordance with the energy transition and the reality of the operators in the sector”. “An effective policy to combat the energy crisis must be based, above all, on attacking its causes and not only on mitigating its effects,” the statement stated. Government and sector are also embroiled by the energy tax.

On their side, from Ecological Transition they explain that the current electricity market is not prepared for situations of high volatility (‘stress proof’) nor for the massive penetration of renewable energies and resources that provide firmness and flexibility to the system in the coming years, such as storage or demand management (‘future proof’).

The Executive’s proposal is based on the fact that the regulator contracts with the inframarginal power plants for long-term energythrough contracts for differences (CfDs) at a fixed price and oriented to costs, and introduce capacity markets for plants that offer firm or flexible capacity, such as combined cycle plants.

Modulate gas investments

On the other hand, Ribera has warned this Thursday of the need to “modulate” the volume of investments in the field of gas infrastructure, despite the fact that this raw material will continue to play a “central” role in the transition process energetic. The minister, who has starred in the informative breakfast ‘Challenges of the ecological transition in 2023’ organized by the Dialogues for Democracy Club, has also highlighted the importance of monitoring the “extension” of gas contracts that can be signed in Europe.

“There are some issues that need to be looked at very carefully. The first of these is that there cannot be a pendulum effect in which we suddenly put too many apples in the basket of new investments in the field of gas infrastructure. It is obvious that gas will continue to be a central piece in the transition process (energy), but it is also true that, for climate, investment, financial and economic security, it is necessary to modulate very much how many resources are allocated to new (gas) infrastructures”, asserted the head of Ecological Transition.

On the other hand, the third vice president has reaffirmed that the deadlines for the approval of environmental impact statements that new renewable energy projects must submit to obtain access and connection rights will not be extended. The term ends on January 25.

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