2023-10-17 02:03:12
Luxembourg (AFP) – The Twenty-Seven seek Tuesday to unblock negotiations on the reform of the European electricity market, weighed down by Franco-German differences on support for nuclear power, at the heart of a debate on the competitiveness of the ‘industry.
Published on: 10/17/2023 – 04:03 Modified on: 10/17/2023 – 04:01
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European energy ministers are meeting in Luxembourg, a week following a meeting between German Chancellor Olaf Scholz and French President Emmanuel Macron – who affirmed the desire of the two countries to conclude an agreement “by the end of the month “.
Since then, the Spanish presidency of the EU has proposed completely removing from the text the controversial question of the support system for existing nuclear power plants, which satisfies neither Paris nor Berlin.
The other countries are hanging on a compromise between the two leading powers of the EU. “The question of distortions of competition is now at the heart of the negotiations, which makes me optimistic regarding an agreement,” Austrian Minister Leonore Gewessler assured Monday.
After the surge in electricity prices last year, the text intends to reduce the bills of households and businesses thanks to long-term contracts to smooth out the impact of the volatility of gas prices.
It is also a question of ensuring more predictability for investors: any public support for new investments in the production of carbon-free electricity (renewables or nuclear) would be done via “contracts for difference” (CFD) at a price guaranteed by the state.
According to this mechanism, if the wholesale market price is higher than the set price, the electricity producer must return the additional revenues earned to the State, which can redistribute them. If the price is below, it is the State which pays compensation.
“Clarification”
Brussels wanted to extend these CFDs to investments intended to extend the life of existing nuclear power plants.
The subject is crucial for France, keen to finance the repair of its aging nuclear fleet and to maintain low prices, a major asset for the country’s industrialists, particularly following the end in 2025 of the mechanism obliging EDF to sell part of its production at knockdown prices.
Something to worry Berlin. Germany, having left nuclear power, fears competition, which it considers unfair, from French electricity made more competitive thanks to massive public support.
More broadly, European manufacturers are worried regarding their competitiveness, between soaring energy prices and massive subsidies for green industries in the United States.
The public group EDF, heavily in debt, “can do thanks to state guarantees” what cannot be done by electricity players in Germany, “all private” and subject to the laws of the market, observed last week the German Economy Minister Robert Habeck, calling for this point to be “clarified” in the reform.
Supported in particular by Austria and Luxembourg, Berlin demands strict supervision of the redistribution of revenues from CFDs on existing nuclear power, particularly from industry.
France, on the contrary, intends to benefit from its long-standing energy choices, at a time when Germany is suffering both from the loss of imports of Russian gas, on which it had become dependent, and from the abandonment of nuclear power – which forced it to restart coal.
“Martingale”
“We must avoid falling into the fantasies of countries which would provide industrialists with energy at almost zero cost, that does not exist. Nuclear power is neither a martingale, nor a particularly expensive energy”, assured mid- July to AFP the French Minister of Energy Transition Agnès Pannier-Runacher.
Nuclear power, on the other hand, makes it possible to “stabilize the intermittency of renewable energies in Europe”, she highlights.
In the absence of a European agreement, Paris has not ruled out acting alone. Emmanuel Macron threatened at the end of September to regain “control of the price of French electricity”.
The Franco-German battle on nuclear power continues on numerous other European texts currently being negotiated: regulations to help green industries, rules on the production of clean hydrogen… A plan by Berlin to subsidize the price of electricity for its industrialists might open a new front.
Another subject will be debated on Tuesday: “capacity mechanisms” which allow States to remunerate the unused capacity of power plants to guarantee their continued activity and avoid future electricity shortages.
Several countries want to be exempt from the planned ecological constraints, with Poland in particular demanding to be able to use the tool for its coal-fired power plants.
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