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    France proposes to extend the "Iberian derogation" for electricity in the EU

    September 9, 2022 - CE Noticias Financieras


      Paris, Sep 8. France will propose on Friday to its partners in the European Union (EU) to extend to the rest of the countries the "Iberian exception" for the pricing of electricity, as a way to moderate the escalation that has occurred due to the induced effect of the rise in gas prices.

      "It will be one of the options that we will put on the table," sources from the Department of Energy Transition explained to the press on Thursday, on the eve of the meeting of the ministers of the Twenty-seven in Brussels to discuss the intervention and the reform of the electricity market.

      For France, the mechanism that the European Commission authorized in June to Spain and Portugal "has an advantage, and that is that it acts on the market price" as has been seen during these months of operation.

      Thanks to the so-called "Iberian exception", these two countries have had wholesale prices clearly lower than those of the rest of the EU since then.

      In the case of France, at the end of August, the price per megawatt hour exceeded the record threshold of 1,000 euros for the first time in history, more than ten times the prices of a year earlier, in a context marked by the shutdown of more than half of its nuclear reactors (32 out of 56) due to maintenance work and the detection of defects.

      If it were to be extended beyond Spain and Portugal, the French sources stressed that it would have to be coordinated at the European level because, otherwise, it could lead to distortions in the interconnections between countries.

      The system in force on the Iberian peninsula limits for a period of twelve months the price of gas for electricity generation, compensated by direct aid to the production companies with items that will be financed by a surcharge on consumers and on the income generated by cross-border trade between Spain and France.

      The low capacity of the 2,800 megawatts of electricity interconnection between Spain and France, which prevents the Iberian peninsula from fully benefiting from the European electricity market, is what allowed the creation of the "Iberian exception".

      France has been taking advantage of this interconnection in recent times to buy electricity, generated to a large extent with Spanish renewables, now that it has great needs due to the problems of its nuclear fleet.

      It so happens that at the same time the two gas pipelines connecting the two countries have been serving for weeks for France to export gas to Spain, which has served as an argument for the French authorities, starting with its president, Emmanuel Macron, to reject once again the MidCat gas pipeline project through Catalonia, which Madrid and Berlin have tried to revive.

      These exports can be explained by the fact that France has already filled its gas reserves to a very high level (more than 94 %), so that it has the capacity to sell the gas that continues to arrive to neighboring countries, while in Spain the maintenance work at several regasification terminals has increased the needs.


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