Last year, the Czech government made good on its threats to “convene as many meetings as necessary” to approve a gas cap and convened an unprecedented number of councils of energy ministers until an agreement was reached. He even handed out sweatshirts with the phrase, now a slogan, among the ministers when, a few days before Christmas, they sealed the pact.
The Spanish government has taken note of the Czech strategy and intends to do the same when, starting on July 1, it assumes the reins of the presidency of the Council of the EU. Its objective, clearly very ambitious, is to carry out the reform of the European electricity market in the second half of the year. Or at most leave it practically ready for Belgium, which will take over, to approve it at the beginning of the year. Nothing, in short, to see each other once a month as if nothing were happening, government sources reported yesterday. The holding of elections to the European Parliament in May 2025 makes the calendar especially complicated for a decision of this magnitude, which will modernize a regulatory framework in force for a quarter of a century.
The European Commission will adopt next Thursday its proposal to reform the European electricity market.
As expected, it does not really question the principle that it is the most expensive production technology (in recent months, gas) that determines the price of electricity and therefore prices are not decoupled. Instead, the plan provides for other mechanisms, such as long-term contracts at a fixed price for renewables, which, in the opinion of Brussels, meet the objective of protecting consumers from large fluctuations in rates and, at the same time, allowing them to benefit of reducing generation costs thanks to renewables while giving incentives to companies to continue the green transition, very uneven throughout the Union.
The proposal is not as ambitious as the one proposed by Spain, but the Third Vice President of the Government and Minister for the Ecological Transition, Teresa Ribera, considers that, in the absence of seeing the formal proposals, “it is going in the right direction.” Although the starting positions between the countries are different and Germany, for example, is reluctant to adopt major changes in the short term, there is “a broad consensus on the importance of updating what we have in common as a good opportunity to continue building Europe”, assured Ribera in Brussels, during a chat with the Politico Europe portal.
Among the things that Spain misses is a specific proposal to regulate “energy storage solutions” with common criteria, a very important element in markets with high penetration of renewable energy. Spanish government sources specified that, among the shortcomings of the draft of the Brussels proposal is not demanding more transparency in long-term contracts and the decision not to bet fully on the so-called contracts for difference, in which buyer and seller agree a price and, once the term of the contract has expired, the price is settled with respect to that set by the market.
The consensus on the meaning of the reform, state government sources, is great. The greatest fundamental discrepancy has to do with the times of the reform and that is where Ribera plans to deploy all his persuasive skills to, as he is already doing in his bilateral contacts with other European governments, convince them of the urgency to solve the problems created due to the new geopolitical situation, the need to move towards the final phase of the deployment of renewables and correct what, in the opinion of Spain, is the great factor of the lower economic competitiveness of Europe compared to the United States, the price of energy.
