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Industry Will Call An Auction In January To Buy Renewable Energy

"The auction of primary energy must be at the average cost of generation"

The Association of Companies with Great Energy Consumption (AEGE) represents a total of 25 industrial companies whose main characteristic is the high percentage that the cost of energy supply represents in their production process. The association has been working on an auction of renewables for the industry with APPA, UNEF and AEE with which it tries to cover 10% of its electricity consumption, as stated in the Statute for electrointensive consumers. To achieve this, the industrialists plan to call a first call at the end of this year or early 2022, which will be dealt with by Omie. Fernando Soto, its CEO, breaks down the details about this initiative.

When do you plan to hold the first auction for renewables?

The most feasible, in January or February of next year, but the sooner the better the storm we are having. That is the only way to get competitive prices, although it does not cover us all the hours, but we have to accumulate little by little. The rest we will buy from the large electricity companies. The Electrointesive Consumer Statute obliges us that, at least, 10% of our energy is in long-term contracts with renewables. Our intention is to launch a first purchase of 4 TWh.

Do they need the authorization of the Government or will they do it directly?

Not needed. It is a private contract. The only thing we want to have are contracts, with defined rules to avoid later problems.

Do only AEGE members enter?

We do it for all those consumers who are certified as electrointensive, since a guarantee by the buyer will depend on the Fergei (Spanish Reserve Fund for Guarantees of Electrointensive Entities). We have told the Ministry of Industry and, in particular, the Secretary of General Industries about our plan and they are totally in favor.

Will they be able to attend the primary energy auction promoted by the Government?

Yes, there are several stages. Now we have, on the one hand, the renewable auctions that will be held next week, which are those of the Ministry for Energy Transition, in which we ask them to be a counterpart of some percentage of that energy but the minister told us no because that was all for the electrical system. Now, the Royal Decree-Law, in article 3, establishes an energy auction for nuclear, hydraulic and renewable technology. In these we have shown the Ministry our interest in participating. As the decree is written, it leaves doubts that everyone can participate. Yesterday the minister clearly said that we would all participate.

Ribera will not apply the hack to electricity companies that guarantee stable prices to the industry
Ribera will not apply the hack to electricity companies that guarantee stable prices to the industry

And what do you expect from the price?

We would be interested if these auctions discover a competitive price, something similar to what the French have with their Arenh rate. If it is the average cost of nuclear and hydraulic generation it will be great, but if they want to sell us energy 5 euros cheaper than the price of the future, which is now at 138 euros, with that we are not going anywhere. The idea, and it is worded like this in the terms of the decree, would be at the average cost of generation. If the electricity companies and the industries collaborate, we can have that type of contract because it would already be for the medium term.

How was the meeting on Thursday with Vice President Ribera?

He told us that he has spoken with the electricity companies and that they are showing a willingness to collaborate. For its part, for example, for contracts that have been signed in advance and that some electricity company had announced that it was going to report, it will allow them to avoid the reduction so that they are not affected.

Should some kind of registry be created for bilateral contracts?

The Government was surprised by the percentage of energy that we had contracted at a fixed price in the coming years. We did the survey among our associates and it came out that we only have 9.5% in 2022 at a fixed price, the rest everything goes directly to the spot or indexed to the spot price, which is the same.

But is that very little ??

Well I would say the industry average will be 15-20%, I don’t think it will add up to more.

“If there are competitive prices, many companies would be interested”

Does that happen because the electricity companies did not offer them contracts or why?

It goes through various topics. On the one hand, because in the past the contracts they have offered were dissuasive. The CNMC released a report in July warning that there is no liquidity in the forward market. Another issue is that not all companies have their order book guaranteed in the medium and long term. Many cannot commit to a 3- or 5-year purchase because they are cyclical businesses and cannot control orders.

Have you been proposed to make a central purchasing office?

The minister informed us that she was going to speak with the electricity companies to see if they would offer us bilateral contracts at competitive prices for the longer term, and a figure of 5 years came out. If there are competitive prices, many companies would be interested. It would not be to cover 100% but if a percentage higher than the 10% that we have now. To the electrics this also gives them stability and certainty.

I understand that they would remove the reduction there, right?

The vice president came to say that all contracts signed with the industry would be exempt from this reduction. Despite the storm that falls, a range of possibilities is opening up, I believe that in 6 months or so we can give a turn to the tortilla.

Did he tell you something about prolonging the tax cut?

We have asked for the production tax to be eliminated. He affirmed that this will be analyzed in the text of the energy tax reform that the Government wants to undertake. He didn’t say no. We are exempt from VAT. The truth is that the minister spoke with the CEOs of all electricity companies in a collaborative tone. He said that they are trying to make the country’s industry one of the engines of our economy and that speaking things are understood. Something that the sector also shared.

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