The Ministry of Ecological Transition today launched a public consultation on the Decision that will regulate the capacity payment mechanism, that is, the system that will serve to reward contributing power plants. Sufficient robust power to guarantee power supply in times of system stressthat is, when there is a risk of fainting.
The regulatory proposal envisages the holding of three types of tenders, the volume and frequency of which will depend on demand forecasts and firm power needs determined five years from now through European or national coverage analyses.
The main auction will allow participation of existing installations and new renewable energy, storage or demand projects that will provide services from the date specified in the call for up to five years after the auction.
Service delivery time will vary depending on the type of installation (existing or new investment) and type of technology. Generally, it will be done annually, and the service period will be one year for existing facilities, 15 years for new investments, and one to ten years for new demands.
In the months following the tender, a second annual adjustment tender will be held, in which only facilities providing service for one year from the date defined in the call can participate.
Finally, an interim tender will be held to guarantee the stability of the electricity system until the year when the service provided by the main tender begins. All exercises will be carried out until then, and existing facilities and new investments can participate with an annual delivery period.
As the manager explains in his financial report, there are many reasons that explain this state of stress in the electrical system. Therefore, although arbitrage revenues are increasing and barriers are being removed due to market volatility, the current market context does not allow new investments in robust and flexible technologies to be made viable. When it comes to participation in all market segments, the fact is that there remains a “missing money” (a term used in the economic literature to express this common phenomenon in energy markets) that hinders the implementation of these investments, This is not only in terms of security of supply, but also in the development of renewable energies. It is also vital in terms of the need for integration; because without these technologies it will not be possible to successfully achieve ambitious renewable targets at the national level.
secondary market
The new order will also create a secondary market that will provide liquidity with the rights and obligations acquired through the change of ownership of the facilities in auctions or their transfer to other facilities that meet the conditions.
Red Eléctrica and CNMC will be responsible for verifying and auditing the provision of capacity service. Its financing will correspond to the sale of electricity and guiding consumers in the market through unit prices differentiated according to tariff bands and time zones that overlap with transportation and distribution charges. In this way, the consumption that occurs during the hours when the stress on the system is highest will be met to a large extent.
According to the government, the standard has a positive environmental impact because one of its foundations consists in the integration of storage facilities, which will allow for a greater expansion of renewable energy sources and ultimately decarbonise the economy.
