More electricity....

For professional reasons I have reasons to study how the Spanish electricity market works. Here I will summarize what I have learned.

A recent study from PwC ("Diez temas candentes del sector eléctrico español para 2012") is very helpful to get an insight in the situation.


While the electricity tariffs in high degree are regulated through the TUR (Tarifa último recurso), the stipulated prices do not cover the costs and there is a yearly deficit which is handled as a debt towards the electric companies.
"Spain is the only country in the world where the customers is in debt with the electrical sector" says PWC. This debt is accumulated year by year and now exceeds 28 800 € (almost 3% of the GDP).

Here is a graph that shows the yearly changes in the electricity tariffs and the deficit year by year (copied from ABC.es).

By "Royal executive order" (Real decreto ley) it has been decided that the deficit should be eliminated by 2013.

It is for that reason PWC comes out with a number of recommendations in their report.

• As a first step, PWC recommends that the access fees should be increased substantially during 2012 and 2013 (30% resp. 18%). This would lead to a 45% increment of the electricity prices for households (12% for industry, as the access fee is a lesser part of their total cost).

• PWC also points on the high costs of the subventions of renewable energy. "These costs could have been lower if there had been a model which had in mind the improvements in technology", they say.

• Regarding the Plan de Energía Renovable 2011-2020, which pretends to reach a higher penetration of renewable than what EU has established, PWC says:

• "It is possible to design alternative scenarios which allows to complies with the European commitment, delaying the entrance of new power and taking advantage of the cost evolution that these technologies will experiment."

• PWC also defends that any decision on closing Nuclear Centrals should be based only on security arguments, following criteria defined and reviewed by the Nuclear Security Board (virtually removing the decision from the politicians table). 

• "In Spain we can not allow ourselves to dispense with [nuclear power]" - the report says.

• PWC also questions the need of the investments at this moment, as the crisis actually is causing the demand to decrease.

• Another important change for the households would be the recommendation to take a further step in the liberalization of the electricity market. At the moment almost all households are covered by the TUR (Tarifa último recurso), meaning that their tariffs actually are regulated. PWC recommends that only household with less than 3kW contracted power shall be covered by TUR. This would affect 19 million households.

From Holaluz.com:

"En la actualidad existen más de 26 millones de clientes domésticos, con derecho a escoger su suministrador de energía eléctrica, y negociar sus tarifas eléctricas.

• La realidad es que solamente unos 2,5 millones de clientes domésticos están comprando su energía en el mercado libre a través de una empresa comercializadora. El resto de los consumidores domésticos (más del 90%) sigue en el mercado regulado (concretamente en la TUR)."