Ribera leaves in the air the auctions of cogeneration and ‘cheap energies’ a year after its announcement

During 2021, and with the price crisis that was experienced that summer, the Government of Spain committed to carry out a series of energy power auctions in different areas that, almost a year later, there is still nothing clarified. These are the auction for cogeneration plants, as well as the inframarginal auction (known as the auction of cheap energy).

This has been reflected in the ‘XVIII Annual Congress of Cogeneration’, which under the slogan ‘Cogeneration, efficient investment to lead industrial decarbonization’, has had a clear vindictive content. Not surprisingly, it is a sector that has suffered very sharply the lurches of the energy crisis.

Although it has not been the only claim of a key sector for the industrial fabric that, in recent months, has been set aside. Specifically, the president of Acogen, Rubén Hernando, has expressed his confidence that the Ministry for the Ecological Transition led by Teresa Ribera “finalizes the promulgation and strengthening of the remuneration to the operation and the evolution of the remuneration system of 2023”.

For Hernando, “the publication of the outstanding remuneration is essential so that cogeneration plants that are not sufficiently covered by the capping mechanism can evaluate and recover their operating costs as soon as possible and reactivate their production levels, further reducing the country’s natural gas consumption and boosting the industrial economy and associated employment”.

More requests from cogeneration

Along with the pending auction, the president of Cogen Spain, Julio Artiñano, also recalled that “the sector needs clear signals that adapt to the reality of the intervened market and with review in time. For example, monthly, not only for the pending months but for 2023, where the new regulation – announced – must stabilize the sector and allow all facilities to operate, including those of pig and olive waste.

And with regard to the most important, the employer demands “the approval of the auction framework, whose draft was published on December 28, so that operators in the sector can provide the necessary resources to attend these, complementing with it the regulatory signal that allows decarbonizing the current facilities with efficiency criteria to support the industry in our country. ”

The demands of the cogeneration sector to the Ministry of Teresa Ribera are now focused on three points: the first, that the pending remuneration be promulgated this month, especially those of the current semester, with the empowerment already announced by the President of the Government on September 6; the second, that the new methodology for updating the remuneration for the operation for 2023 and subsequent ones be published, and thirdly, that the Order of bases of the auctions of 1,200 MW of cogeneration be established before the end of the year to be convened in 2023.

Cheap energies

Apart from the interests of cogeneration, there is another auction that is also completely frozen. This is the inframarginal. And this comes with added controversy on the part of the big energy companies.

The frontal clash between the large electricity companies (with Iberdrola and Endesa at the head) and the Government with the inframarginal auction in the background has left, for the moment, a clear winner: the companies. There is no date for the so-called auction of cheap energy, and the move that these companies have carried out for the moment has gone well.

The price crisis in the energy sector has generated multiple open fronts in which to get their hands on to lower costs. The Government determined in the autumn of last year – by royal decree – that one option was to force companies to auction part of their energy, instead of everything going to their own marketers. But everything has been cut short.

On this auction (which comes hydraulic and nuclear technology), the Ministry for the Ecological Transition promised to make this movement before December 2021, but finally it was not executed. And for now there is no clear date, and it seems that there never has been. The objective was that Iberdrola, Endesa, Naturgy and EDP will offer 15,830 GWh, equivalent to 6.3% of national electricity demand in 2020. The problem is that the utilities were never satisfied and, from the first moment, they have known how to escape the situation.

The strategy of these companies – despite the government’s warning – has been to sign long-term bilateral contracts with a fundamental addition: a clause that warned their customers (marketers and large industry) that in case the Government called some type of auction of cheap energy they could vary prices or directly break the contract.

Iberdrola, Endesa, Naturgy and EDP hide behind the fact that these clauses were already established before last autumn. In any case, this has caused the government to be between a rock and a hard place; And, most worryingly, that at this time it is not known when this inframarginal auction will take place.

If Vice President Teresa Ribera’s team decides to carry out this auction, the large electricity companies will not hesitate to execute those clauses. This would be a severe setback of image. Therefore, in sources of the sector, the Government does not make the decision so as not to be involved in another mess.

Source: Digital Economy