Spain offers concessions to France's nuclear mix to smooth EU electricity market reform

The Spanish presidency of the Council of the EU has distributed this Wednesday its first official proposal to pave the way in the negotiations on the reform of the electricity market and that includes concessions to France, whose energy mix has a strong presence of nuclear energy, while introducing controls to avoid a distortion of the market that especially worries Germany.

The proposal, to which Europa Press has had access, seeks to bridge the gap between France and Germany, whose clash frustrated the reform agreement last June, still under Swedish presidency after Berlin's refusal to open financing contracts for difference to existing nuclear plants because it considered that it benefited Paris excessively.

This type of contract is between an electricity generator and a public entity, usually the State, and stipulates that the seller will pay the buyer the difference in the price of energy from the time of purchase to the signing of the contract, thus limiting the generator, which receives a stable income for the electricity it produces.

To bring both positions closer together, the new text allows a price to be set in the event of an extension of the useful life of the nuclear power plants that benefit from these incentives, thus preserving the autonomy of the Member States to choose their energy mix while introducing controls to ensure that this does not distort the market, according to diplomatic sources.

Those familiar with the negotiations have explained that the text, which will be discussed this Thursday at a technical level, is the culmination of the work carried out during the summer on those elements that still lack agreement among the Twenty-seven and with the aim of reaching "as soon as possible" a general orientation on the new design of the EU electricity market.

The proposal also defines the design features of the instruments to ensure the economic viability of the lifetime of these plants and requires that the revenues from these contracts for difference be distributed to final customers.

In addition, these contracts for difference must be designed to ensure that there is no under- or over-compensation; determine the amounts of remuneration through a transparent and non-discriminatory bidding process; and avoid distortions of competition and trade in the internal market arising from the distribution of revenues to companies.

New investments for electricity generation will include investments in new electricity generating facilities or investments aimed at substantially extending their useful life.

However, in the latter case, where the remuneration is not determined through a tendering procedure, it must be ensured that the electricity produced under the contract for differences in relation to the total volume generated by the installation does not exceed the ratio between the new investment and the initial gross investment value of the asset or that the revenue obtained from the production of such electricity is intended for final consumers.