Before the deputies, Elisabeth Borne indicated on Tuesday that the mechanism which allows Spain and Portugal to divide their electricity bill by three could be extended to the rest of Europe.
“Mr. Putin has created a gas crisis in Europe, Europe has invented an electricity crisis”. Questioned in the National Assembly on energy prices by the Republican deputy Olivier Marleix, Prime Minister Elisabeth Borne indicated that France was seeking to benefit from the same mechanism which allows, in the midst of a crisis, Portugal and Spain drastically lower electricity prices.
“We must lower the price of electricity on the European markets”, indicated the Prime Minister. “Spain and Portugal have succeeded in dividing the price of electricity by 3. These days, the President of the Republic will meet the President of the European Commission and the German Chancellor and we have good hopes of bringing this mechanism everywhere in Europe”.
How Spain and Portugal lowered the price of their electricity
If they have lower prices than elsewhere, it is because Spain and Portugal benefit from a derogation from the European Union to exit the European energy market for one year.
Since June, the two countries have left the European system and can set the price of their electricity themselves. Whereas in EU countries, the price is indexed to the most expensive means: gas-fired power plants. Moreover, it is the last power plant activated which sets the price, which is often very high in times of tension.
Spain and Portugal benefit from a geographical distance which makes them less dependent on Russian gas. In addition, both countries generate a large share of their electricity from renewable sources at very low marginal cost. This is the reason why they were able to leave the European system.
Towards a return of the “MidCat” subject?
In the light of the Spanish and Portuguese example, indexing the prices of electricity to those of gas is now the subject of debate in Europe. France and Italy want a reform of this system. But this “Iberian” solution risks coming up against the countries of northern Europe and Norway, Europe’s leading supplier of natural gas since the sanctions against Russia, which are opposed to it.
For them, the gas supply is the problem. In the negotiations, it is therefore not impossible that Germany will push Emmanuel Macron to review his position on the “MidCat”, this gas pipeline under the Pyrenees which would make it possible to supply more gas from the south to the north of Europe. But so far, France is opposed to the construction of the missing link of the “MidCat” between Barbaira in Aude and Hostalrich in Catalonia…