Experts expect an increase in gaslight production to meet French demand, and doubt investments in renewable energy
The plan to limit the price of gas in the wholesale market has some effects that experts have warned about in recent days, just before Brussels endorses the final text that Spain and Portugal sent to the Commission on Thursday, before it is passed by the Council of Ministers. accepted. They warn, among other things, that it could cause higher levels of CO2 emissions by offloading more of the combined gas cycles, paralyzing the signing of long-term contracts (so-called PPAs) due to the uncertainty generated; or postpone certain investment decisions.
That of the reactivation of the cycles is perhaps one of the major problems, which would have an unexpected impact on the Spanish market. According to Red Electrica, these plants have contributed just over 17% of the electricity mix so far this year. Rubén Hernández, an analyst with the ASE Group, explains that the new Spanish market price “will be more competitive than the French, and French consumers will accept that difference.” “But they will do – he claims – with more generation from Spain, something that will be in favor of combined cycles, who will have to produce more to meet that demand” bullish on the other side of the Pyrenees.
There will be a physical limitation in this opportunity to increase exports to France: the interconnection with the Iberian Peninsula is minimal, barely 3% of the total. That is precisely one of the reasons that Spain and Portugal put forward for temporarily leaving the European electricity market. In any case, an increase in the production of gas cycles, in order to supply France with more energy, if they ask, will lead to greater emissions of carbon dioxide (CO2), a circumstance that “would also distort the price signal of decarbonization ”, according to Rubén Hernandez.
Luis del Barrio, of Arthur D. Little, for his part, also points out that “it will be more difficult for renewables to continue developing PPA contracts.” This expert wonders “who is going to sign them with the current regulatory uncertainty” characterized by the Iberian exceptionalism. For this reason, he believes that “a measure that seemed very good in the end does not seem the best way to solve the problem.”
Analysts also warn that as the Spanish-Portuguese price becomes distorted, investors will need an optimal price signal, which will not exist. And they warn that investment processes, especially in renewables, could grind to a halt.
Source: La Verdad
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
