The Third Vice President of the Government and Minister for the Ecological Transition and the Demographic Challenge, Teresa Ribera opened the door to a possible update of the electricity market after Spain and Portugal received the go-ahead to implement an Iberian exception for one year that reduces the impact of the price of gas in electricity generation.
In statements during his speech at the III Expansion International Forum, Ribera pointed out that the measure “opens a debate regarding the regulation of the electricity market”, which, although it has worked so far, he considers that it is “probably in need of modernization, a update” like the one approved yesterday.
As explained by the third vice-president, the Iberian exception “will largely prevent the spread of gas prices to electricity market prices as a whole”.
The European Commission approved the mechanism on Wednesday, after more than two months of negotiations. In this way, both Spain and Portugal, which depend less on gas to generate electricity, will be able to put a cap on the price of this fuel when it is used for this purpose. Thus, they hope that the electricity bill will be reduced practically immediately, once it starts up.
Previously, the minister had assured during an interview on Onda Cero that this cap on the price of gas will help reduce inflation “around eight tenths or one point” in the coming months.
Teresa Ribera opened a conference that later continued with a session on Energy transition and impacts on society. Norman Foster (president of the Norman Foster Foundation), José Bogas (CEO of Endesa), Ignacio Colmenares (president of ENCE), Federico Linares (president of EY Spain), Erik Solheim (president of the Green Belt and Road Institute and former minister of Environment of Norway) and Maarten Wetselaar (CEO of Cepsa).
“We know that we must change the paradigm,” warned Ribera, who also explained that the change must be “accelerated.” In his opinion, we must respond to the climate crisis, biodiversity and production and consumption models. Water, energy and land, she stressed, are the keys “to pay attention to from a regulatory point of view.”
In this sense, the minister announced that her department is launching a new public consultation today to articulate aid worth 150 million euros for the repowering of old wind plants, the renovation of mini-hydroelectric plants and the recycling of wind turbine blades. The idea is, in line with the message of change in the production and consumption model, that these resources can be reused.
During this session, which began by emphasizing nuclear energy, José Bogas explained that the National Integrated Energy and Climate Plan (PNIEC) set a route, with a date, for the closure of nuclear power plants, but its objective is not that closure, but the transition itself. It is not as important as the final goal, he pointed out, so the date could be updated. Likewise, he pointed out that decarbonization would reduce emissions by a considerable percentage, but it must be accompanied by the electrification of the system. “A very clear example is the electric vehicle, since transportation is the largest emitter of CO2,” he exemplified.
Maarten Wetselaar, for his part, gave examples of the challenges of electricity -air travel or steel mills-, which is where he considers that biofuels have to act in this energy transition. “We have to invest in green hydrogen and biofuels,” he detailed. And he believes that Spain can be a leader in this sector and exporter of energy.
Another topic discussed was Russia’s energy dependency. Ignacio Colmenares pointed out that, in any case, energy crises such as those in Ukraine “are circumstantial and, therefore, they do not have to make us change the roadmap”. “The transition is not a cost,” added Erik Solheim, who believes that “being greener is an opportunity.”
Bogas highlighted how the “economic war” that was chosen to fight Russia had consequences and, in any case, could not always be achieved. An example is gas, which is currently almost impossible to supply and, moreover, appears to be key in a context of transition in which it is wanted to leave, which is why investments are complicated to go to alternative markets. All this, he summed it up, entails “inflation.”
Wetselaar, however, focused on the positive impacts of all this, such as a commitment to energy efficiency, which until now had been more neglected. On the other hand, he explained that “higher energy prices give oxygen to green hydrogen.” “With the current price of energy, the energy transition is going to take place more quickly.”
“Spain and Italy did their homework very well”, celebrated Bogas in reference to the management of the Next Generation Funds. Of course, he stressed that “it still seems that little money has arrived” to its final recipients. “I would like this to go faster,” he acknowledged, due to its importance in accelerating structural change. The manager asked the Government to do everything possible so that the funds finish arriving.
In this sense, Federico Linares recalled that 91 reform milestones have already been met and 11 PERTE have been approved, but there are also “very obvious shadows”, such as the fact that the impact of the funds on GDP has been 0.3 points in 2021. To these shadows, he added, others not so concrete are added, such as the arrival of money to SMEs.
Maarten Wetselaar warned that “we cannot make the energy transition happen through” these funds. The key, he believes, must be to focus on regulation. “If we don’t have proper regulation, no amount of funding is going to make it happen,” he said.
Regarding the suspension of the friendship treaty with Algeria, José Bogas admitted the difficulty of finding himself in the middle of “two enemies.” “I hope and wish that these tensions go down as soon as possible,” he said, although he was relieved because, in principle, it seems that it will not affect the gas that arrives from Algeria.
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