A year and a half after Spain’s insistence on reforming the electricity market, the European Commission announced its modification at the end of August of last year in the words of its president, Ursula Von der Leyenwhich seemed called to change the way prices were set of this raw material. After what that announcement cost, this Thursday’s agreement means little. “We know that this It is not the in-depth reform that the president of the Commission announced a year ago”, acknowledged in the presentation of the pact in Strasbourg the rapporteur in charge of the negotiation by the European Parliamentthe Spanish Nicolás González Casares. “Precisely for this reason, as Parliament we have fought, and this is reflected in the agreement, for the Commission to review to 2026 the effectiveness of the current structure and operation of the short-term electricity marketseven in crisis or emergency situations,” added González Casares.
“And, more generally, the potential inefficiencies relating to the internal electricity market and the different options for the introduction of possible remedies and instruments applicable in crisis or emergency situations in the light of international experience and developments and new developments in the Union electricity market. Where appropriate, the Commission must accompany this evaluation with a legislative proposal”, stated Casares, witness to an agreement reached in Record time”just nine months after the proposal of the European Comission in March of this year.
The door is thus left open to a possible review of the market after this pact, which focuses on modifying everything that exists around of the daily market, but without touching it. The heart of this Thursday’s agreement is aimed at promoting the long term contracts (through formulas that in most cases are already in force in Spain) in the hope of reduce the weight of energy in the daily market and, thus, eliminate price peaks. But this impulse will volunteerso its impact will depend on the decisions made by the different Member States and their energy producers.
It maintains the marginalist system of price fixing for which the most expensive technology (gas, now) will continue to be the reference. In other words, if next year there is another crisis like the one started by Moscow in the spring of 2021 by pressing the gas tap, the upward effect of electricity prices would be the same. What the agreement includes are bigger springs to know how to proceed and do it quickly, by establishing a maximum price cap at which prices could reach 180 euros per megawatt-hour and define that it should be the countries – meeting in the Council – who declare the energy crisis at the proposal of the Commission, among other measures.
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The marginalist system was designed to promote the development of renewables, at a time when electrical systems were mainly made up of fossil technologies. The logic was that all technologies were remunerated by the price of the more expensive Because otherwise no one would invest in renewables, since they are so cheap. But in a system dominated by renewables this logic breaks down. Little supporter of reform deep of the electricity market, like the one proposed by Spain, He is the former energy commissioner, Miguel Árias Cañeteand yet he warned that “this reform would not be the last” at an event held in mid-October at the University of Salamanca on negotiation of the future electricity market.
“This reform at this moment is a continuity of the previous. But since the energy transition supposes a scenario in which the generation of electricity will be done with a few very high percentages of renewable energy, next commission will have to start reflect on how to configure an electricity market when all energy is renewable and cleanbecause there marginalist system may not work,” Árias Cañete warned then. The problem is that not all countries have the same rate of renewable growth, so the everyone’s urgency is different. In the case of Spain, this year the milestone will be met that half of electricity generation will be produced with renewables, but this is not the case for all countries. For example in Francewhere nuclear is dominant.