We are living difficult times. All of a sudden, COVID has stopped our lives. At EnergyEcoLab we are all safe working from home, but we are all still full of #Energy.
Last Friday, Fundación Renovables decided to organise an energy event from home. Four energy experts were interviewed: Joan Groizard (Director of IDAE), José Bogas (CEO of Endesa), Natalia Fabra (Head of EnergyEco Lab) and Fernando Ferrando (President of Fundacion Renovables). They answered the questions that the energy community had been sending by twitter over the week. Questions ranged from the effects of COVID on the electricity sector, to the role that energy companies can play during this crisis, to the new norms that the government plans to send to Parliament right after the end of the lock-in.
Natalia Fabra argued that COVID is having a strong impact on electricity demand in Spain, which has fallen more than 10% since the start of the lock-in. The 20% reduction in electricity demand seen in Italy could be around the corner. As a key indicator of economic activity, this reflects that the Spanish economy has started to slow down. Depending on the scope and breath of the policies implemented by the national and supra-national governments, this shock could have long lasting effects in terms of unemployment and firm exit.
The reduction in electricity demand will depress electricity prices, as the weight of renewables in the energy mix goes up. This will bring good news to households and large energy consumers, but will put cost recovery by the renewable investments at risk. With and without COVID, it is urgent to rethink how to pay for renewable output in ways that allow them to break even despite the predicted reduction in spot market prices. The new auction design that the authorities plan to implement soon – i.e., bidders will compete to have the right to provide renewable energy at a fixed price, to be determined competitively – should prove to be an efficient solution. Regarding the current discussion as to whether energy companies should be nationalised, Natalia Fabra believes that the focus should be put in designing a good regulation rather than on the public versus private ownership debate.
The video of the event (in Spanish) can be seen here.
The transcript can be dowloaded here.
Stay safe! #EnCasaPorTodos
Natalia Fabra also participated in another web seminar, organized by UNEF. The speakers discussed about the electricity market reforms. The video can be seen here.