The Spanish government will request authorisation from the European Commission to extend the so-called “Iberian derogation”, an exceptional measure limiting the gas price for electricity generation in Spain and Portugal until the end of 2024.
This was confirmed by Ecological Transition Minister Teresa Ribera (PSOE/S&D) during a press conference Tuesday after the Council of Ministers was held in Madrid.
Previously, in an interview with private television channel Antena3, the minister explained that Madrid would like the “gas cap” to be “as low as possible”, at around €45 or €50, and added that “it could be extended, at least, until the end of 2024”.
On Tuesday, she informed that the Spanish progressive executive of PSOE and Unidas Podemos submitted to the European Commission a proposal to undertake a “fundamental regulation” to revamp the EU electricity market for the EU-level debate planned for spring.
In a bold move, the Spanish government proposed that the Commission remove gas from the European wholesale market. Madrid’s proposal is the first to be sent by an EU member state to the European Commission.
The core of the Spanish proposal is the decoupling of the electricity generation with natural gas from the market, which, in principle, would not imply eliminating the marginal pricing system, according to sources familiar with the dossier quoted by Cinco Días.
The “Iberian derogation” does not take out the gas from the pool, but imposes a price cap to prevent infra-marginal pricing technologies (nuclear, hydro or renewables) from being contaminated by the high prices of gas (and also coal).
According to Spain’s vision, there are several ways to address the decoupling proposal, the same sources added.
These options include segmenting the market by technologies; removing some energies, such as nuclear, from the market, guaranteeing a price ceiling of some €60/MWh, or creating a capacity market, in parallel to the marginal pricing scheme, for backup technologies (gas, nuclear and coal), which could choose between one or the other, the financial daily reported.
However, Ribera admitted that the Spanish proposal will have to pass many hurdles, as the “Iberian derogation” was, in principle, approved only until May this year.
“We do intend to ask for the application of the ‘Iberian solution’ to be extended until the European regulation has been modified”, the minister pointed out.
“We still have to put these proposals for a fundamental solution to the European Commission, but also this extension (of the “Iberian derogation”) beyond June 2023, until this crisis lasts and the EU regulation has not been updated”, she added.
Elaborating on the characteristics of this exceptional measure approved by the Commission for Spain and Portugal, the minister recalled that, at the time, a cut-off price of €40 was agreed upon in offers presented by the Spanish companies that generate electricity from gas until 31 December, an amount to which another five euros would be added each month until the measure expired.
The reform will be controversial, as the current market system took many years to be set up, and many EU countries already oppose the move including Germany, Austria, the Netherlands and Scandinavian nations.
In the case of Eastern EU countries, divergences persist, and only the southern bloc (France, Italy, Spain and Portugal) is clearly in favour of an in-depth reform of the wholesale electricity market.
(Fernando Heller | EuroEFE.EURACTIV.es)
Source: euractiv.com
