Spain subsidized 600 million in electricity to Morocco after the change of position on Sahara

Morocco took advantage of cheaper electricity in Spain during 2022, coinciding with the historic change in the Spanish government's position on the Sahara, which meant that relations with Algeria were completely severed.

According to sources in the energy sector, the African country saved a total of 575 million euros by buying Spanish electricity. This amount does not evaporate as it is the national system that has to pay these costs.

According to European regulations, exchanges between member countries generate so-called congestion rents that are shared equally between the systems of both countries, which are managed by Red Eléctrica in Spain and the Moroccan manager. The Spanish-Moroccan interconnection was inaugurated in 1997 and has a capacity of some 1,400 MWh with an infrastructure of 29 kilometers under the waters of the Strait of Gibraltar. The pumping of electricity will be increased in a few years' time, as a capacity increase of another 700 MWh is being planned for 2026.

And why this amount of money? Because Morocco increased its imports from Spain fourfold last year. According to data from Redeia (formerly Red Eléctrica), the national electricity balance ended up negative, with a figure of almost 1.5 million MWh in 2022.

Specifically, a total of 1.8 million Mw was sent from the Iberian system, while the inflow of electricity to Spanish infrastructures stood at 422,000 Mw. This means that 81% of the electricity flow in 2022 was exported and only 19% was imported.

For example, May saw one of the highest peaks of electricity outflow to Morocco. According to official figures compiled by Red Eléctrica (REE), we have to go back to 2020 to find a monthly peak of energy outflow to the African country when Spain exported more than 100,000 MWh obtaining a negative balance (difference between imports and exports) of almost 38,000 MWh.

To get an idea of the electrical twist in the relations between Spain and Morocco it is enough to review some years, For example, in 2021 our system received more energy from the southern African country than was sent to Rabat. Specifically, the electricity balance ended in a positive figure of 178,743 Mw. In percentages, exports accounted for 42.5% and imports for 57.5%.

If we go back to 2019, Spain increased its electricity purchases from Morocco, just when there was a price crisis and the African megawatt hour was much cheaper due to the use of coal to generate power.

As the market works this way, Morocco took advantage of the interconnections with Spain and benefited from the Iberian exception. The mechanism implemented by Moncloa last June to lower the price of electricity, in which the price of gas was limited, has meant a reduction in the cost per megawatt for Spaniards and, therefore, for the rest of the countries that have interconnections with the Spanish system, including Morocco.

"The Iberian exception has managed to lower electricity prices in Spain, but at the same time, it has had several other consequences, such as causing an increase in gas consumption and, at the same time, allowing exports of relatively cheap energy to neighboring countries to grow", the International Energy Agency recently pointed out in a report on the electricity market.

France also benefited

Spain has also become a net exporter of electricity to France. Traditionally, the opposite has been the case and our country demanded French energy. But everything has changed after the imposition of the gas cap. Aelec explained that France's high demand, with the interconnection operating at full capacity, would generate an incremental demand of up to 25 terawatt hours (TWh), which is 10% of Spain's demand.

The neighboring country, thanks to its nuclear energy system, used to be our reference supplier because when Spain does not have enough electricity within its borders due to our dependence on renewables, it turns to France to guarantee supply. Something that changed completely after the imposition of the gas cap. According to industry estimates, Spain has also subsidized French consumers by just over 800 million euros.

Gas isolation

Morocco, which has taken advantage of new relations with Spain, has also had to restructure its energy map after Algeria turned off the gas tap two years ago.

In October 2021, Algeria's president, Abdelmayid Tebún, confirmed the termination of the contract with Morocco that allowed gas to be transported to Spain via the Maghreb-Europe gas pipeline (GME). The infrastructure, which was 25 years old, linked the three countries and was 1,400 kilometers long and pumped some 6,000 million cubic meters of gas to Spain.

After Spain's historic turnaround, Algeria raised the tone and threatened Moncloa to stop sending gas to our system if it was shown that the raw material was being resent to Morocco.

Any shipment of Algerian natural gas delivered to Spain, whose destination is not the one foreseen in the contracts, will be considered as a breach of contractual commitments and, consequently, could lead to the termination of the contract linking Sonatrach to its Spanish customers," Algeria reminded.