Months of negotiation and a situation of maximum tension in the electricity market have led to Francia changing position and unlocking the construction of the new electrical connection that will connect Spain and the east coast of France through the Gulf of Vizcaya.
According to the information sent yesterday by the energy regulators of both countries, the Spanish National Commission for Markets and Competition (CNMC) and the French Commission de Régulation de l’Énergie (CRE), both organizations have signed an agreement reviews the distribution of the financing of the electrical interconnection project after the initial project has gone from a budget of 1,750 million euros set in 2017 to the current 2,700 million.
An increase in which both the route change that had to be applied in 2019, after detecting instability problems in the underwater tube, and the escalation of material and labor costs due to the impact of the covid crisis have weighed heavily. as of 2020.
As signed yesterday, both countries agree to update the cost of the initial project to 2,390 million euros and divide the amount equally. The initial agreement established that Spain alone would face an initial net contribution of up to 875 million euros, which is now also eliminated.
The extra costs expected above those 2,390 million euros and up to 2,700 million euros will be supported by 62.5% by REE, the operator of the Spanish electricity system, and 37.5% by RTE, the similar French body. Any additional costs foreseen over those 2,700 million euros will be supported at 50% by each carrier.
France had been resisting for months to modify the initial financing conditions set in September 2017, which were very favorable to the neighboring country since at that time Spain was the main interest in building that electrical connection. At that time, the French nuclear plant was not suffering from the operating problems that it has had to face in the last year in the worst-case scenario, with an energy war that for the first time in years has turned France into an importing country. of energy, even from Spain.
The infrastructure designed in 2017 consists of two independent electrical links, each with a capacity of 1,000 MW, between Cubnezais (France) and Gatica (Spain). It contemplates approximately 400 km, including a 300 km maritime section that would cross the Bay of Biscay. Its construction will double the interconnection capacity between Spain and France from the current 2.8 gigawatts (GW) to 5 GW when it is operational. Currently the expected date for it to become operational is 2028.
In the initial agreement, Spain assumed, in addition to the aforementioned 875 million euros, 62.5% of the additional cost overruns that exceeded this figure, since it was estimated that the benefits of the infrastructure would accrue mainly to Spain. Under this distribution context, Spain had to pay 1,576 million euros and France 946 million euros, which would be completed with the granting of European financing of 578 million euros, since the infrastructure was declared a Project of Common European Interest.
Another of the issues that have brought the agreement to the deadline (if this March 3, 2023 was exceeded, they risked a delay of two more years) is that of congestion rents, which are those generated by the difference of the price of electricity between Spain and France multiplied by the energy that passes through the interconnection. These rents, which were frozen, have now been shared 50% between the two countries. All this benefits a Spain that in the future, given its potential for renewable energy production, may become an energy exporter to France.