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    The Spanish presidency of the EU seeks an agreement on nuclear power to close the electricity reform

    September 13, 2023 - CE Noticias Financieras


      The possible aid to nuclear energy continues to be the main obstacle for the EU-27 to give their approval to the reform of the electricity market, the first in more than two decades, which Spain seeks to close in this semester that holds the rotating presidency of the EU. A new compromise proposal, circulated among the European capitals with a view to being discussed at the end of this week by those responsible for the sector, seeks to offer greater guarantees on the "level playing field" in this area. Its aim is to curry favor with both France, which wants to include its nuclear plants at all costs, and those countries, led by Germany, which fear that this will lead to market distortions.

      The new proposal, to which EL PAÍS has had access, seeks to be a "compromise" to achieve progress in the discussions stalled since the beginning of the summer on direct price support schemes for new investments in electricity generation, the so-called CFD (contracts for difference), according to sources familiar with the negotiations. In addition to establishing controls on the contracts, monitored by the Commission, one of the changes is that participation in these mechanisms will be "voluntary for market participants" and not mandatory, as established in the European Commission's original proposal.

      CFDs are agreements signed between an electricity producer and a state authority to agree on a guaranteed strike price - rather a range - that gives stability to prices, and avoids fluctuations and unbalanced gains. If prices fall below that range, the state must compensate the producer. If they exceed them, on the other hand, the country can use this extra income to invest it in aid to households and companies.

      In addition, the new proposal establishes the characteristics of these instruments to "avoid any distorting effect" on markets or on competition and trade in the internal market resulting from the "distribution of revenues to companies". Countries such as Germany have repeatedly expressed fears that the CFDs applied to nuclear power plants could end up becoming, de facto, subsidies to French atomic energy, much of whose infrastructure is in urgent need of repair. In exchange, the proposal also allows a price to be set if the lifetime of the plants is extended, which is what Paris is looking for.

      Read moreEuropean Parliament calls for a ban on power cuts for the most vulnerable consumers

      The text adds an additional guarantee of transparency: when prices exceed the fixed range and it falls to the States to distribute these extra revenues, the Commission will monitor the process. And, if it considers that in a particular case such redistribution causes a "distortion in the internal market that threatens the level playing field" of others, the Community Executive may "impose, by means of an implementing decision, a limit on the proportion of revenues" to final consumers in that State.

      Report to the Commission

      By January 1, 2025 at the latest, the EU-27 must also send a report to the Commission detailing, among other things, the amount of electricity produced under such contracts for difference, the amount of revenue collected and how this revenue is distributed.

      Sources familiar with the negotiations, which have lasted throughout the summer and will have a new important moment this Thursday -when a technical meeting will be held in Brussels-, defend the proposal as balanced. In this sense, they claim that it preserves the autonomy of the Member States to choose their energy mix within the framework of the European objectives. At the same time, it introduces controls to ensure that the preservation of this autonomy does not distort the market.

      Last week, during a visit to Brussels, the Third Vice-President and acting Minister for Ecological Transition, Teresa Ribera, who is responsible for the European negotiations on the matter this semester, said she was "confident" of reaching an agreement in the coming months, despite the fact that the negotiations are at a standstill at Member State level.

      "We know there are some concerns from both France and Germany about their positions and the potential impact on their industries," she told the media. "We have to make sure everyone is comfortable [with the final proposal], because it's in everyone's interest. We're trying to get everyone's trust, we want to be an honest broker that facilitates everyone's trust," he added.

      But the positions are also somewhat unsettled in the European Parliament, despite the fact that it already fixed its position in July by approving the proposal of the European Parliament's rapporteur, Spanish Socialist MEP Nicolás González Casares. Now, a group of French MEPs is seeking to reopen the agreed text to introduce amendments favoring nuclear energy.

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