How Portugal and Spain describe lowering the price of “turning off” France – Observer
You have free access to all the articles of the Observer for being our subscriber.
Iberian energy, a concept that the leaders of Portugal and Spain (above all) sold at the summit of the island’s heads of state of the European Union, could imply the separation of the integrated European electricity market. The single gas price proposal can work with a single price ceiling protected by a price cycle that can work with the single price market coming from France. The model that is being discussed with the European Commission admits there to Pyrenees electricity exports and raises reservations.
Despite the interconnection capacity between Spain and France and between Iberia and the Pyrenees) — less than 1% of production capacity compared to Europe’s limited 3% (with limits of 1% of production capacity up to Europe’s price cap) even higher.
France has recently gone through a period of shutdown of its nuclear park, associated with a wave of low temperatures pushing electricity prices by 3,000 euros per MW hour. And when that happens, Spain automatically starts exporting electricity to France (because its production is much more competitive, in addition to the need to respond to demand). When selling electricity beyond the Pyrenees, Spain and Portugal — which have more production from renewables — are affected by the rise in French source prices. The opposite also happens when nuclear power is in full swing, but that is not what has happened in recent weeks.
Maximum values in areas where price matching in the European Union is found
At the time when the match between European prices was minimal, Iberia paid less for electricity than France
French engravers are giving gas to the Iberian claim that managed to reach a difficult agreement at the last extraordinary European Council to respond to the war taxes and a bad degree to the German opposition that even led to an untimely departure from Pedro Sánchez’s room, as a contour at the time the international press. It was a political victory, but one that still requires a technical negotiation with the European Commission, which in the past has already turned up its nose at the Spanish pretension of changing market rules.
EU recognizes Iberian exception. Portugal and Spain may lock in gas prices to produce electricity
However, a proposal that is being discussed with the technical services of the European Commission has not yet convinced Brussels and one of the reservations has precisely to do with the separation of prices between electricity markets, which goes against the objective of integrating electricity markets , at the limit, according to El Pais, it could break with the internal energy market.
this monday, the Spanish newspaper quotes documents from the Government of Madrid that go further in separating the Iberian and French markets, admitting the need to definitely buy in some market segments, in addition to the price auction, in order to avoid market distortions and price subsidization on the other side of the Pyrenees.
European Commission sources quoted by the newspaper can warn that this Spanish step will result in a restriction of electricity restrictions with France, breaking with the unity of the European market. And if they recognize that the interconnection with Spain is limited, they fear that if the precedent for created could be repeated in more interconnected countries.
The scheme defended by the two countries is and that Iberian laws are complied with for the same time made complex of supply and demand. One of them follows the only European Euphemia that defines how to enter according to the offers in the market and that the marginal cost of the last most expensive offer, sets the price of all this energy. the other using the cap EUR 30 per MW hour for all thermal production (mainly that using gas, but also coal) that manages to enter the market at that time. The result of this limit imposed on the most expensive technology is a lower energy price than that selected in recent months, which will be around 110 to 130 euros per MW hour, according to figures already published by the Spanish press.
It is the result of the second auction that will fix the price of electricity traded on the Iberian market, but to prevent this effect from spilling over to France by subsidizing prices on the other side, as exports to that country will be made at the price that will result from the European mechanism. for which it has been natural to set the price of electricity. This second internal auction for market prices to see Spanish daily (with effects on the forward market) would allow, according to the arguments of the Iberian side, to maintain the contracts and the operation in the market regime. But it raises other doubts.
Central energies will be supplied to be compensated for selling from below — the natural price escalation (inflamed by the war in Ukraine and the gasoline used as a cost to Russia) is the main cause for the highs reached in the electricity market. And in compliance with guidelines already given by Europe, the two countries intend to avoid creating a deficit that would result from postponing the payment of the extra cost that remains to be covered for the following years.
This is where the concept of internalization of these costs by the electricity system comes in, which, at the same time, will mutualize (in the words used by Portuguese political representatives) the unexpected and random gains that some producers are having at the high price exchange without supporting the charges (with fuel and CO2) that cause them.
Its reflection to the thermal plants will be distributed by all electrical energy sensors and indirectly by customers (electricity consumers). Despite this, the first and second will pay less for the electricity they have been paying for. So who loses in this redistribution of costs? Electric producers that combine extraordinary and unexpected profits Portugal António Costa fair with as renewable power plants.
Costa says extraordinary gains from renewables will financially control electricity prices
THE power point disclosed by the Government about the family is being announced in Brussels, indicates that Portugal expects to be able to reduce billing costs by millions of euros per month and companies by 690 million euros per month “through the electrical limitation of the unexpected and extraordinary profits of the electricity generating companies. But for the initial pressure of the ceiling proposed by the two countries, how could the initial proposal of the two countries ceiling emerge, how the initial proposal of the two countries could emerge, as the initial forecast of the two economies, as the initial forecast of the two European services , like the initial forecast of the two authorities, may fall short of the forecast in the initial forecast.