Saturday, September 30

Renewable vaccines against the energy pandemic

The Russian variant (Putin-22) of the energy pandemic has caught Europe unvaccinated. It is a very lethal variant, with a higher incidence than previous variants (Filomena, January 2021; global gas shortage, September 2021); with a peak of 700 EUR/MWh (remember that until last July the maximum price was 180 EUR/MWh) and above all, with futures leaving, on March 7, above 400 EUR/MWh for the entire year 2022 .

And that, for now, the Putin-22 variant has not affected the purchase of Russian gas, which continues to flow normally – in fact, since the invasion, Europe has increased the consumption of Russian gas-. However, it has been the perfect excuse for the markets to artificially trigger prices. Some will cash. We pay consumers. For a change.

Now we only have to put patches to reduce the impact of contagion: maximum electricity prices, direct aid for the purchase of gas, auctions of amortized energy at a regulated price, import more liquefied natural gas from the United States, lower the heating temperature a few days, stop factories… until Putin stops murdering Ukrainians and the markets speculate. It would be preferable to give aid to the final consumer (charged to the Budget, to a reduction in the income from amortized infra-marginal technologies or in any other way), either with direct payments or with tolls or negative charges. If the market is disturbed, there is a risk of penalizing those who did their homework and obtained price protection and benefiting those who played Russian roulette with open market positions.

However, these patches will not protect us against new high-risk variants. Today it is the Russian variant, but tomorrow it may be the Algerian, Venezuelan, Qatari or Nigerian variant. The Russian variant should not be solved by changing the satrap that satisfies our addiction to fossil fuels. Nor force historically friendly peoples to betray. Let’s go further. Structural measures. We must vaccinate against energy crises. Nip the problem in the bud.

The 1973 oil crisis marked the beginning of the end for oil –drop from 0.9 to 0.3 barrels per $1,000 of GDP. The Chernobyl accident was the beginning of the end of nuclear energy. The invasion of Ukraine should open our eyes and mark the beginning of the end for gas.

The good news is that there are winds of change in Europe. The expression has been written in an official document the windfall profits: rain of money that falls from the sky watering the nuclear and hydraulic power plants with banknotes. Jorge Fabra, is, finally, mainstream. The RePowerEu Strategy it should aspire to be to the energy crisis what NextGenerationEU funds are to covid-19. Europe failed in the euro crisis of 2008. It was right in the response to the covid crisis. Next week, at the decisive European Council to be held in Brussels, it will be possible to guess whether or not Europe is right with the way out of the energy crisis.

Europe should send a clear signal to Member States about the importance of decarbonizing to reduce energy dependence. “Strategic autonomy” President Macron calls it. Boris Johnson, “National security”. Europe does not have enough oil or gas. But the solution is not nuclear energy either: suffice it to say that The US nuclear lobby is busy these days pressuring Biden not to sanction imports of Russian uranium.

What do we have in Europe? Rivers, wind, sun, as well as human talent and cutting-edge technology to transform Nature’s energy into kilowatt hours. Let’s take advantage of our competitive advantage. For the first time, we have a technology, renewables, that not only makes it possible to fight the climate crisis, but is also the cheapest and can be produced locally. Let’s remember that solar or wind are cheaper even than the energy generated by nuclear power plants already amortized.

In this line, Spain has all the necessary ingredients for success. Although it is suffering from the rise in prices of the Russian variant like the rest of European countries, the futures markets point to a drop in prices in Spain to less than half of those in Germany or France due to the greater development of renewables.

So what should Spain do? To manage the “meanwhile”, palliative and price control measures, trying to protect consumers, industries and also preserve competition –more than 50 marketers have already gone bankrupt due to the price crisis and the big power companies are lowering prices well below market prices – bravely. The reduction to windfall profits approved in September was on the right track. Now the EU and also the OECD say so. The big mistake was exempting not only the plants that already had PPAs -logically-, but also the PPAs subsequent to the reduction rule -because it was enough to close a one-year PPA at the inflated prices and benefit equally from the profits undeserved-. The obligation to offer a part of the hydraulic and nuclear energy to competitors is also very positive, although its ambition should be increased, from 25% to at least 40% of the volume, and that the State set the delivery price, as is already happening north of the Pyrenees.

But the important thing is to go to the root of the problem. Structural solutions. Energy Transition: energy efficiency, renewable energy, storage, electric mobility and hydrogen. Insisting on new gas infrastructures that will not be approved for several years is a serious mistake. Let’s forget about Midcat, at least as a gas infrastructure. It is late and would be abandoned soon. If anything, interconnection to transport hydrogen through the Mediterranean arc. But let’s not invest in additional gas infrastructure.

Structural measures must go the other way, starting from the basis that each kWh not consumed or covered with renewables is one kWh less that we buy from the dictator on duty and less CO2 that we pour into our already battered planet Earth. And we also lower prices for all consumers. Renewables are the best way for a just transition.

The energy transition requires massive investments, but it is not expensive. Solar and wind energy do not require public aid, but rather the elimination of barriers. Accelerate the processing of parks on land. In Spain there are plenty of projects. Let’s sieve Let’s choose the best and discard the majority. But the chosen ones, express processing. In 24 months from the presentation of the project, if it is good, it should be authorized – as provided for by the renewables directive – and in 36 months it will be working. And in self-consumption, several simple measures could be adopted on March 29 that would help speed up deployment. To begin with, eliminate the need for authorization from the Highways body, which is the latest municipal fashion. But there are also cases of authorization requirements for Coasts, Waste, Rivers and even patrimonial compatibility with the Camino de Santiago (sic). For every month of delay, unhappy customer and happy Putin. In the current situation, someone investing in putting solar panels on their roof is an act of energy autonomy that the State should reward, not hinder with absurd obstacles such as those described.

In addition, it is necessary to modify the VAT Law to adapt it to the reality of self-consumption. If someone makes their flat profitable, renting it and obtaining an income, they pay personal income tax. No VAT declaration is required. If you make your roof profitable, obtaining income from the sale of solar energy, even if it is a symbolic amount, current regulations require VAT registration. This means that smaller installations are made, to avoid having to collect VAT and having to pay VAT -with personal income tax, more than 21% will be paid in many cases, but it avoids having to declare VAT on a recurring basis-. Spain is interested in occupying each m2 of roof, to accelerate the energy transition and reduce the needs for land use. Along the same lines, the dynamic coefficients of shared self-consumption must be approved and surpluses must be allowed to be shared -currently only 100% of the energy can be shared-.

In terms of public investment, in solar and wind energy we must focus on the reindustrialization -not autarky-, so that most of the materials are European. In batteries, electric mobility and hydrogen, public aid is still necessary to make the first technological generation profitable and help achieve economic parity with respect to the fossil alternative.

The impact of the Russian variant will depend, on the one hand, on how long the invasion of Urania lasts, and on the other, on the temporary measures that Europe dares to adopt. There is not much room for action. In the short term, the rules can be modified, but not the energy mix. The important thing is to take advantage of the momentum, with energy at the center of the agenda and public and business pressure for price increases, to vaccinate ourselves, with good doses of renewable energy, against future energy crises. There is no time to lose.