Energy crisis: Spain beats the Persian market | International

Spain has finally gotten away with it. Not because of her strength, but because of the strength of her reason in this pulse. And it is that the internal European energy market is a farce. Does not exist. There are only two of its components. A set of goals and a strategy to achieve them.

The objectives are two. Decarbonize the economy (zero greenhouse gas emissions) by 2050. And the intermediate milestone of 55% in 2030. The strategy is to replace polluting energy sources with renewable ones. It is detailed by the European Green Deal, and it is largely financed by the Next Generation Recovery Plan (NGEU). Although it will cost more.

Another element can be added. In the electricity subsector, a common pricing mechanism, determined by the marginal price (the most expensive) of the different sources (renewables, oil, coal and gas) that are exchanged in kilowatts. It was agreed in the EU Regulation 943 of 2019. It worked normally. Until the shortage of supply of supplies from these sources due to the complicated post-pandemic recovery, aggravated by Putin, triggered prices, especially gas.

Everything was blown up. And he exposed the raw seams of a market that is aspirational (being optimistic) or Persian (being pessimistic). Where the law of the jungle rules. Or the strongest.

These outbursts happen when under a pompous title (domestic market) there is hardly a carcass. In this supposed market, there is no free movement throughout the common territory, a key requirement of any integrated market. It is revealed by the energetic islands, almost isolated: the Iberian Peninsula, Greece. Electrical exchanges are confined to the approximate perimeter of navigable river Europe.

Dependence on imports from abroad ranges from almost zero to infinity: Romania, 23.1%, or Sweden, 26.6%; compared to Malta, 102.9% (Eurostat, 2019).

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The disharmony or asymmetry of the components of the final electrical product is abysmal. France generates it with 70% of nuclear origin; Luxembourg, with 80% renewables; Spain exhibits 15% of gas (before, 23%); Germany, 27% coal (previously 19%). Those on the central-eastern flank use much more gas (the most expensive source today, the one that sets the price) than the southerners: that is why the surcharge of their cheap sources is lower than that faced by the Mediterranean. That is why they suffer more.

Spain soon came out to meet the urgency of a North surrendered to the servitude of Russian gas. To guarantee supply, he proposed pooling purchases and speeding up storage capacity.

Out of reciprocity —in addition to rationality—, if not out of solidarity, his own anguish had to be addressed: give him room to alleviate an exorbitant retail price —distorted by the common and structural fixing mechanism. Even if it was temporary and exceptional. More consecrated markets, such as the agricultural one, become more flexible. They reduce their demands on imported products. This time it was time.

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