Bankinter | Red Eléctrica (REE), the group responsible for managing Spain’s electricity grids, has asked the National Commission for Markets and Competition (CNMC) to urgently process – within five days – its proposal to change some of its electricity system operating procedures in order to prevent another blackout.
Among other measures, it proposes that all conventional power plants with the capacity to regulate electrical voltage – essentially nuclear, gas, combined cycle and large hydroelectric plants – that are operating at a given time can be automatically required by REE to act as a buffer for the electricity system in the event of a power surge in the grid. Until now, these types of power stations could offer this buffer service on a voluntary and remunerated basis, under a system known as the “restrictions market”. This market is programmed by REE on a daily basis, 24 hours in advance.
Bankinter analysis team’s view: Electricity companies consider that this proposal by REE to change the operating procedure of the electricity system could constitute market intervention. Under this proposal, nuclear, gas, coal and hydroelectric power stations would have to make themselves available to REE immediately – to control overvoltage in the grid – regardless of the electricity companies’ plans for their power stations. It is positive to take measures to protect the operation of the system, but it is important to determine at what price and for how long. The measure proposed by REE could make the electricity system less competitive and lead to increased costs for users.
