Teresa Ribera reiterates to Brussels the need to reform the electricity market

Yesterday it was learned that the Minister for the Ecological Transition, Teresa Ribera, has sent a new letter to the Vice President of the European Commission (EC), Frans Timmermans, in which she suggests that if you want to ensure the success of the energy transition you have to rethink the design of energy markets.

Ribera points out in the letter, dated June 29, “that the markets must not only ensure an efficient allocation of resources and adequate price signals, but also, and very especially, a fair and equitable distribution of the benefits associated with the transformation of the generation mix,” reports Efe.

The minister criticizes the marginalist model of the electricity market, which pulls prices up

Minister Ribera continues with the same line of argument as in the previous letters in which she defends that fossil fuel power plants have gone from accounting for 25% of the energy generated to between 10% and 12% currently, but the rapid rise in the price of CO emission rights₂ is having a great impact on electricity bills (in Spain the most expensive electricity in Europe is paid), “with regressive effects on consumers and threatening the energy transition”.

Ribera tells the vice-president of the European Commission in his letter that consumers do not understand why efforts in the deployment of renewable energy do not translate more directly and immediately into lower electricity bills.

It also points out that today in the Spanish electricity market non-CO-emitting power plants₂ and launched before the adoption of the ETS – the EU emissions trading system that came into force in 2005 – they get dividends and extra benefits for saving the price of a CO₂ that do not emit and that were not taken into account at the time of its construction.

The minister denounces that the market offers benefits to companies for saving the price of a _CO2 that they do not emit

Ribera explains that thanks to the ETS mechanism and the energy policies put in place, emissions from the Spanish electricity generation mix have fallen by two-thirds since 2005 (0.425 tons of CO equivalent).₂ per megawatt hour (MWh) in that year, up from 0.144 tons per MWh in 2020).

In short, Ribera asks Europe for changes in the energy business model, as well as in the wholesale market that is marginalist and pulls up prices for reasons such as the current high prices of natural gas in international markets.

On the other hand, yesterday the Royal Decree was ratified in Congress that temporarily reduces the VAT from 21% to 10% and suspends for three months the generation tax paid by the electricity companies. In the Lower House, he also criticized the functioning of the marginalist market because “it does not allow to take advantage of the lower costs of generating electricity with cheaper energies.”

Source: The Vanguard