Luxembourg, (EFE).- The countries of the European Union (EU) failed today in their attempt to agree on a common approach to reform the EU electricity market, with a dispute between France and Germany in the background over nuclear energy .
In the last stretch of the negotiation, the ministers tried to iron out differences around how the so-called contracts for difference (CdF) will work in which the State agrees with the generator on a fixed price for the sale of electricity within a certain period and then returns the difference, depending on whether the actual price has been higher or lower than the one stipulated.
Division with nuclear power plants
The strongest divisions were over whether those contracts apply to existing nuclear plants that extend their useful life or expand their capacity as requested by France, which has been scratching concessions to atomic energy in every piece of legislation related to decarbonization.
But the refusal of the anti-nuclear block led by Germany, in which Spain and Luxembourg are also located, did not give in to the claims of Paris.
Sweden adjourns debate
The rotating presidency of the Council, in the hands of Sweden, decided to postpone the debate and try to soften it in meetings at the diplomatic level.
Diplomatic sources told EFE that the reform of the electricity market is “a priority” for the current presidency of the Council that Spain will assume in July and the vice president and minister for the Ecological Transition, Teresa Ribera, informed her counterparts that “if necessary will convene an extraordinary council of ministers in July” to close a pact.
Capacity mechanisms to avoid blackouts
Another of the points that generated contention were the capacity mechanisms, that is, coverage systems to guarantee that there will be no blackouts when the renewables are at low production peaks due to lack of sun or wind.
Poland could continue to subsidize coal-fired power plants
To bring Poland closer to the agreement, the Swedish presidency, in charge of forging a consensus, offered that Warsaw could continue to subsidize coal-fired power plants, a point that displeased many countries, such as Luxembourg, which regretted that they were introduced, “through the back door, new coal concessions.
It was particularly surprising that such a concession was offered to Poland when it is not allowed for certain gas plants, even though they emit less carbon dioxide (CO2) than coal.
Price cap on inframarginal technologies
The debate was also agitated by the possibility of introducing a price cap on inframarginal technologies, such as hydraulics or renewables, in the event that electricity prices skyrocket again.
The countries of central and northern Europe do not like the idea, nor does the European Commission, but countries like Greece, which opted to keep that “ace up its sleeve”, or Spain, which claimed that they could capture the benefits from heaven until 2024, prolonging the emergency agreement adopted in October.
This provides for a ceiling for generation technologies such as hydro or renewables at 180 euros per megawatt hour, while the European Commission recently suggested that the temporary measures agreed during the 2022 energy price crisis be withdrawn.
Adapting the market to the era of renewables
The objective of the ministers was to agree on how to adapt the electricity market to the era of renewables with stable and long-term contracts that provide affordable prices, guarantee security of supply and encourage investment, to then negotiate the final adjustment with Parliament Europe, which plans to close its negotiating position in September.
The need to undertake the first market reform in two decades was born in the heat of the hydrocarbon price crisis in 2022 and its contagion effect on the electricity bill.
Disconnection from Russia’s fossil fuels
The EU decided to accelerate the disconnection of fossil fuels from Russia, which it accused of using energy as a “weapon of war” in the framework of the invasion of Ukraine, while member states weathered the storm as best they could by improvising temporary measures of emergency.
Having overcome that energy hurricane, which recorded its worst moment in August 2022, the Twenty-seven decided to adjust the community market to a new reality in which Russia was seen as a hostile supplier of whose fossil fuels had to be hastily moved away, while at the same time They massively deployed green and autonomous generation sources.
The objective is to close the new legislation before the end of the current European legislature with the elections to the European Parliament in June 2024.