Spain supports the countries that request this system against those that doubt it because they have a greater presence of gas and coal
The European Commission proposes that the model of the Iberian exception that allows Spain and Portugal to put a ceiling on the price of gas used to generate electricity be extended to the rest of the European Union with a cap of between 100 and 120 euros per Mwh, a limit softer than the average of about 48.8 euros of the Spanish-Portuguese mark; a step with which he estimates a net benefit of 13,000 million euros for the block.
"Adding this mechanism above the inframarginal cap would thus produce a net benefit of approximately 13,000 million euros over the 70,000 million of the inframarginal cap," says the working document that the Community Executive has circulated among the capitals in the framework of the negotiations to intervene in the energy market.
At this point, Brussels adds, the resulting net benefits will have a "beneficial effect on inflation", although it warns that one of the risks associated with the measure is the foreseeable increase in gas consumption, contrary to the objective of seeking sources alternatives after the rupture with Russia due to its invasion of Ukraine.
In this context, community services are committed to setting a maximum price "high enough so that gas power does not become more attractive" than producing electricity from other technologies that set between 100 and 120 euros per megawatt per hour , almost double the average limit of about 48.8 euros that Brussels allowed Lisbon and Madrid.
This seeks a "balance" between the effectiveness of the measure and preventing gas from gaining ground over alternative technologies, explains the document, which also emphasizes that in the current situation, with a gas price of around 60 euros per MWh , this measure would have no impact.
Among the risks, community services point out that consumption could skyrocket to a great extent due to the increase in flows of subsidized electricity to non-EU neighbors, such as the United Kingdom or Switzerland, which, added to the increase within the EU, could lead to a "volume of additional gas consumption of between 5,000 and 9,000" million cubic meters (bcm).
When calculating the cost for each country and its consumers, the Executive chaired by Ursula von der Leyen points out that it will depend on the number of gas power plants present in each of the Member States, since it will be higher in those that rely heavily on gas to produce their electricity.
"This would be the case, for example, of Germany, the Netherlands and Italy," concludes the community document, thus advancing the partners with the largest reserves to the measure and confirming that France will be "the largest beneficiary."
SPAIN SUPPORTS THE EUROPEANIZATION OF THE MECHANISM
Upon arrival at the meeting of EU Energy Ministers in Luxembourg, the third vice president and head of Ecological Transition, Teresa Ribera, said that Spain will support the countries that defend the extension of the Iberian mechanism because she understands that they feel "unprotected against rising prices.
"There will be Member States that ask for rapid action by the Commission and we consider that it is our obligation to support those Member States that, at the moment, are unprotected", reasoned Ribera, who pointed out that "today" the mechanism is not activated because the price of gas is below the fixed ceiling.
All in all, the Iberian mechanism acts as "reinsurance" given that, if the price of gas "grows again", Spanish and Portuguese consumers would be "protected" with the reactivation of the mechanism, said Ribera, who understands "perfectly" that partners with a system of electricity production with little gas and coal aspire to Europeanize the system.
The analysis of the Community Executive of Ursula von der Leyen will be the basis of the discussion that the ministers will hold behind closed doors during lunch to bring positions closer, but no decisions are yet expected on this point of the energy review since Brussels has not presented a legislative proposal but that the reflection is at an earlier stage.
In this context, the support of countries such as Spain and France for the Europeanization of the mechanism collides with the reserves of Germany and the Netherlands, fundamentally, because they use more gas to generate electricity.
"Countries where coal and gas continue to be the majority source of electricity production are concerned that some of us have cheaper prices and they remain in high price brackets due to having a greater presence of gas and coal. This division means that be more cautious," said Ribera.
Another of the "headaches" of the measure, in the words of the third vice president, is how to adjust the mechanism "if there is no way to avoid" that third countries, such as the United Kingdom or Switzerland, import European electricity but would not form part of the system.
Among the options, the community services document proposes a "double auction" so that third-party importers who do not join the initiative inspired by the Iberian model have to pay the initial price of the subsidized energy.