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Most European politicians embrace the need for an energy shift from carbon fuels. But only if it doesn’t require them to vote.In Spain, political leaders Intervene In the electricity market to protect customers from soaring electricity prices in the region. Their actions could put pressure on utilities’ incentives to invest in green energy. British politicians should not take control of them.
This year, electricity prices in Europe have skyrocketed. In Spain, wholesale prices have more than tripled year-on-year, reaching a record high of over € 150 per megawatt hour. September is the normal transition period. In addition to unpredictable weather, uneven power demand can cause problems for utilities. In addition to this, the fact that the prices of both natural gas and carbon emissions traded have skyrocketed. Together they are pushing up electricity prices. Renewable energy still can’t fill the gap. In the UK, it has supplied only 18% of electricity to the grid over the past year. It was even less during the less windy summers.
Electricity traders do not expect high prices to continue. Futures markets suggest that Spanish prices will halve next year. But for the Spanish government, which wants to please voters right now, that’s not enough right away. We plan to suspend the tax on consumer electricity bills that will help pay for Spain’s energy conversion. In addition, Prime Minister Pedro Sanchez has promised to deprive local utilities of profits. The numbers are rough, but the government plans to create a storm tax that is potentially worth billions of euros.
Public perceptions may be distorted by the fact that utilities such as Iberdrola are expected to report record operating profit this year. This does not guarantee Spain’s big plans. We also want to change regulated rates to reduce the impact of rising natural gas and other input costs on homeowners’ invoices. This sounds far more annoying than the price cap introduced in the UK four years ago. It’s market interference.
If you’re lucky, the more power you have available, the lower your electricity bill will be when the generator ends its maintenance period. Still, it does not stop political heat from interfering with the electricity market. Cooler heads must be prioritized for the market to function properly. Punishing utilities does not help Europe’s energy shift.
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Power prices: Spanish solution will knock renewable efforts Source link Power prices: Spanish solution will knock renewable efforts