Reduce the benefits of the renewables sold in the daily market: option to reduce the electricity bill

In recent months, the renewable generation that has come to the wholesale electricity market has multiplied its reasonable profitability by six.

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The rise in prices in the electricity market has been detrimental to some sectors but beneficial to others. Specifically, for renewable generation that has come to sell its production in the wholesale electricity market in recent months. “The cost of production in relation to profits has multiplied by six“Sources from the electricity sector point out to EL ESPAÑOL-Invertia.

For example, “plants prior to 2014 included in what is known as RECORE (renewables, cogeneration and waste) are granted a annual reasonable return of 7.1% for 25 years, which is reviewed every three years, as a semi-regulatory period, and every six ”. That is, today, they receive a remuneration of 30 euros / MWh, but it could be modified in a few years, in addition to what they are paid for their electricity in the daily market or pool.

But not only. “You also have to look at how much is the production cost of the rest of renewables that also sell their energy every day and obtains a remuneration at the price of gas ”. It is more difficult to calculate but, as of July, the price has exceeded 80 euros / MWh and has even touched 200 euros / MWh in October.

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Laura Ojea

Remuneration review

In 2022 the three years will be fulfilled to review the remuneration parameters of these renewables, but could the Government reduce its reasonable profitability given the benefits that have been obtained in these months ago? They have improved from 7.1% to 40% due to high electricity prices.

“The preamble to the European Directive 2019/944, on common rules for the internal electricity market, mentions an interesting issue,” he explains. Seguimundo Navarro, managing partner of the law firm inARB and arbitrator (ArbP and MCIArb) in international courts.

“In point 15, it is stated that market regulations allow the entry and exit of producers and suppliers based on the evaluation of the economic and financial viability of their operations.”

In his opinion, “the Government could make the calculations and decide that with the income received in recent months for a price of pool so high, it could either reduce the share of its reasonable profitability, or shorten its term ”. To put a simile, something like it happens with the amortization of a mortgage.

“This principle indicates that, if this decision were carried out, it would not be incompatible with the possibility for member states to impose public service obligations on companies operating in the electricity sector in the general economic interest”, continues the legal expert. But it must be done “in accordance with the Treaties, in particular with Article 106 TFEU, and with Directive 2019/944 and Regulation (EU) 2019/943”.

Offers to PVPC and industry

Another option, which El Economista has advanced, is for the Government to bind the electricity rate at the cost of renewables as an exceptional measure until wholesale prices normalize.

The idea is that they stop participating in the wholesale electricity market and receive a price between the 57 and 60 euros / MWh. An improvement on the previous forecasts for these technologies that were around the 50-52 euros / MWh.

“We must not forget that the electricity market is a regulated sector”, concludes Seguimundo Navarro, “and the European Union not only looks after the interests of companies but, above all, of citizens.”

In addition, there is little possibility of new international lawsuits in this sector since last October the Court of Justice of the European Union (CJEU) left millionaire arbitrations in siding facing the Spanish State for renewables.

It is a sentence of last September, in which the Grand Chamber of the CJEU pronounces against the use of the Energy Charter Treaty (ECT) to sue governments of the European Union.