Ribera redeems Stellantis with EU funds: high voltage to be linked to the electricity grid
January 25, 2023 - CE Noticias Financieras
The global COVID pandemic brought together for the first time the efforts of the European Union in favor of an abrupt change in production models: the agenda towards decarbonization was already clear beforehand, but there were, until then, no funds available to pay for it. The invasion of Ukraine, which clearly showed the EU's enormous dependence on foreign energy, accelerated the process. Now there is money, a lot of money, on the table. This roadmap includes the vehicle factories, the continent's industrial linchpin, with complete electrification plans that will make it possible to meet Brussels' demands in terms of emissions. But there was a serious problem at the Stellantis Vigo plant: it has a deficit electricity supply, with a power of 132 kilovolts (kV), which causes constant power cuts and the loss of hundreds of cars a year. How could it become a 100% electric vehicle factory if it does not have enough power to assemble combustion models? Now, after many hesitations, promises and refusals, the central government has guaranteed a solution to this historical anomaly. The Balaídos plant will be connected to the very high voltage (220 kV), with a substation to be financed with EU funds. A project that will go hand in hand with the Perte VEC (electric and connected vehicle), as both the management of the factory in Vigo and the top management of the group presided by Carlos Tavares had demanded.
The third vice-president and Minister for Ecological Transition, Teresa Ribera, was the one who cleared this path yesterday. And in a resounding way, despite the fact that she herself had acted as a stone in the shoe for the possibilities of the substation, insisting in recent months that Stellantis Vigo had no "need" to reinforce its electricity supply and even contradicting the Minister of Industry, Reyes Maroto. "It is a key substation to provide the Stellantis car factory and the entire industrial area of Vigo with greater security of supply," he exposed this Tuesday, to questions from FARO, after advancing this decision after the weekly meeting of the Council of Ministers. There are no investment figures for this project, although Ribera did anticipate that funds will be used from the REPowerEU Plan, designed by Brussels to save energy, "stimulate industrial decarbonization" and, ultimately, stop suffering the effects of the fuel veto controlled by Vladimir Putin.
"A key substation to provide the Stellantis car factory and the entire industrial area of Vigo with greater security of supply".
Teresa Ribera - Minister for Ecological Transition
To enable the construction of a high-voltage substation, it must be included in the planning of the transmission grid designed by the Government, which is then sent to Red Eléctrica Española (REE). They are carried out for periods of five years. The Balaídos substation, although it was planned for the period 2015-2020, is not included in the current one (until 2024). How will it be done?
First of all, a current modification of that network planning will be made, and it will be executed immediately. "Before March 31, 2023," Energy Transition sources specified. This procedure is by no means usual, but it is allowed by the last Royal Decree approved by the Executive to alleviate the effects of the war (20/2022). It says: "It contemplates the launch of a new planning of the electricity transmission grid to accommodate the grid reinforcement needs that have been identified". And it continues: "By means of this Royal Decree-Law, a mandate is introduced to the Government so that, in the first quarter of 2023, it initiates a modification of specific aspects of the grid planning". This will include the Balaídos substation, which at the time had been called the New Vigo project and had been budgeted at 66.8 million euros. This exceptional process will also be used to build a substation in Sagunto for the Volkswagen battery plant.
"This punctual modification of the grid planning will be started before March 31, 2023"
Teresa Ribera - Minister of Ecological Transition
The same sources of Teresa Ribera's team pointed out yesterday that it was "in the last year" when they detected "a need for reinforcement" of the supply network, an extreme that contradicts with two written answers sent to the Senate and as many missives sent to the president of the Xunta and the conselleiro of Economy, Alfonso Rueda and Francisco Conde, respectively, as FARO shelled. In any case, it is a decision that unblocks a claim that Stellantis and the entire network of suppliers have been making for more than ten years. "The process is the right framework to properly analyze all proposals and welcome all initiatives that contribute to the modernization and decarbonization of the economy," they reiterated from Madrid. The announcement was well received by the company, pending a forthcoming administrative concretion, and by the head of the Galician Government. "It is one of the issues that I asked for in our first meeting, good news for Vigo and for Galicia", emphasized Rueda, who also pointed out that "we had a letter in another direction, but I am very happy that they have rectified. It is a merit of all", he concluded. Abel Caballero, the mayor of the city of Olívica, was also pleased. "It is great news for the city. Vigo continues to move forward.
The first investments for the new industrial platform of Balaídos would be executed already this summer.
The group appreciates the progress made but insists on specifying the support for the investment in the coming weeks
Time is running out, especially in the automotive sector, and any industrial project of the size of a new platform or launch begins to be worked on many years in advance. In the specific case of the STLA Small to which Balaídos aspires, three years before. Sources of the multinational piloted by Carlos Tavares explain that the decision on whether or not to assign this project to the Galician factory has to be taken in a matter of "weeks" because the first investments in the center must be executed this coming summer, taking advantage of the break for the vacations of the staff in August.
The group appreciates the predisposition of the Government to lend a hand to the company, after the more or less public disagreements between the two parties. The connection of the factory to the Very High Voltage network (MAT) of Porriño is one of the advances at the negotiating table, but not the only one. The financial support of the Executive to the investment, either through the Perte or directly through the PGE, as has happened with the 190 million euros allocated to Volkswagen investments in Valencia and Catalonia, is vital (the group asks for a percentage of aid of 25% of the total investment), as well as the contributions to which the Xunta, the Zona Franca or the City Council itself have committed.
But beyond the expressions of support, before making a decision, the word most repeated by Stellantis managers is "concretion", in reference to the aid. The Vigo plant needs a replacement for the Peugeot 2008 (V20), which has to start production in 2026, and the first investments will have to be made next August.