A year ago, such price levels would have been considered maddening; today they arouse greed: in Spain and Portugal, a megawatt hour (MWh) of electricity has been trading between 150 and 250 euros for a few months on the spot market (where traders buy and sell the day before for the next day)…while flirting with 300-450 euros in a France that was caught off guard. And for good reason, last May, the Iberian Peninsula decided to take the initiative and put an end to an uncontrollable increase in prices, and capped the price of gas used to generate electricity.
On paper, the idea has something to seduce. you even have to extend it to all Europe “Now they are putting pressure on the French government and Medef. The goal : ” decouple gas and electricity prices ” Y ” have much lower bills “Economy Minister Bruno Le Maire stressed on Wednesday. On the same day, the European Commission was also open to discussion: we are ready to discuss the introduction of a temporary ceiling said its president, Ursula Von Der Leyen, in a letter sent to the Twenty-seven.
And yet, several experts are sounding the alarm. Because beyond the Pyrenees, the price that consumers actually pay is still very high, much higher than in France. Above all, such a mechanism, which is similar to a massive subsidy for fossil gas, risks increasing the use of this hydrocarbon in electricity production. Thus aggravating the supply shock, therefore the crisis, and slowing down the necessary energy transition.
Subsidy for gas-fired power plants
To understand this, you have to see how Spain and Portugal limit the MWh. In fact, with the world gas rush, gas will be sold at a very high price and neither Madrid nor Lisbon can do much about it. The system, therefore, does not consist of buying cheaper gas from those who produce it, but of compensating a posteriori the operators of Combined Cycle Gas (CCG) thermal power plants, which are self-sufficient in gas and generate electricity from this hydrocarbon. In other words, the State subsidizes the gas to lower the cost of the CCGT fuel to 40 euros per MWh.
“If gas imported into Spain costs 300 euros per MWh, the State pays the difference between 300 and 40,” explains Jacques Percebois, an economist and energy specialist.
The principle: that these operators can sell the electrons resulting from this operation at a lower price. Above all, given that the price per MWh on the wholesale markets is adjusted to the marginal costs of these gas plants, which are the last calls to the network, the subsidy they receive from the State allows them to reduce these costs, and therefore , to limit the general increase in prices.
A tax of 150 euros per MWh paid by consumers
Just here it is: this mechanism of gas top it must be financed by someone. ” In Spain and Portugal, it is the consumers who pay it via tax, both individuals and professionals. », emphasizes Jaime Arbona, director of thecompany Selectra Spain, specialized in the comparison of energy offers. However, this tax amounts to approximately 15 cents per kilowatt hour (kWh), or 150 euros per MWh! So that the invoices have greatly increased “, according to Jaime Arbona. A distinction must be made between the prices of the wholesale market, in which suppliers and some large industrial consumers operate, and those of the retail market, which more generally includes the final consumer market.
“Everyone sees their bill blow up, it’s pretty catastrophic. If the MWh amounts to 250 euros in the wholesale market [soit environ 5 fois plus qu’en septembre 2020, ndlr], everyone will pay around 25 euro cents per kWh, to which, therefore, 15 cents of tax must be added to subsidize gas-fired power plants. There are already companies that are closing chains of activity, because they cannot assume it”, specifies the broker.
For households, the situation is all the more critical since the regulated electricity sales tariff (TRVe) regulated by the Spanish public authorities is, in fact, largely indexed to market prices and varies every hour. However, in France, this TRV is only changed every six months in general. Above all, in France, its customers will experience an increase in bills of only 4% in 2022 and 15% in 2023 thanks to the tariff shield deployed by the government. ” Unlike in Spain, individuals are hardly aware of the increase in electricity prices. Here, everyone scans the market every day because it has a direct impact on prices. We don’t talk about that anymore! “, Jaime Arbona points out.
According to calculations by Selectra, the average bill of a Spanish household that has subscribed to the regulated electricity rate has gone from €674.32 in 2020 to €972.16 in 2021, then €1,397.32 in 2022.
139 GWh of additional gas demanded every day in Spain
That’s not all: the mechanism could even end up aggravating the crisis a little more, estimates Thomas Pellerin-Carlin, director of the European program of the Institute for Climate Economics (I4CE). ” By moderating the rise in the price of gas for the plants that use it to produce electricity, there is a risk of encouraging more and more the consumption of gas to generate electricity, and therefore of aggravating the risks of shortages “, argues the researcher. In other words, by masking the supply shock at the origin of the price rise, the mechanism threatens to accentuate it. ” If wholesale prices are high, it is not because of the market formula, but because of scarcity and dependence on fossil fuels “, adds Nicholas Goldberg, energy expert at Columbus Consulting.
Above all, in the longer term, such a device could slow down the transition to energy sources that emit less greenhouse gases. The ” gas top ” has already ” slowed down the energy transition “, has also recently pointed out the Spanish newspaper Of the world. In fact, according to a study published a few days ago by the Spanish think tank EsadeEcPol, by dint of incentives the introduction of the cap could have led to an increase in the use of combined cycle plants ” in the country. Specifically, the effect would be an additional 139,000 MWh per day for the entire period.
On the French side, however, these perverse effects do not stop ambitions. “ I know there are reservations, but we have worked on it technically so that [le mécanisme] avoid excessive gas consumption », assured last Friday the Minister of Energy Transition, Agnès Pannier-Runacher. It remains to be seen what form this might take on a European scale, who would finance the subsidy for gas-fired power plants and whether its generalization would mean the end of the tariff shield.