The energy ministers meet in Stockholm on Monday 27 and Tuesday 28 February for an informal European Council, where the reform of the European electricity market will be discussed in particular. Each will present its proposals, while the Commission must present a text on the subject, on March 14.
The debates promise to be lively, as the differences are numerous. France and a few other countries, such as Spain and Portugal, plead for an overhaul of the current mechanism. The wholesale price of electricity is currently based on the production cost of the last plant called, to balance supply and demand. These are usually gas-powered units.
An electricity price modeled on that of gas
We saw the consequences last fall. Soaring gas prices have led to soaring wholesale electricity prices, even in countries like France where gas represents only 8% of electricity production and where the weight of nuclear power is not not sufficiently taken into account.
The situation can no longer last, we believe on the French side, where we are worried about the consequences of high electricity prices in Europe, on the competitiveness of the industry. To decouple gas prices from those of electricity, or in any case to mitigate the perverse effects, France is campaigning for the proliferation of contracts fixing electricity prices over the long term, which was rather frowned upon until now in Brussels, because it is seen as an obstacle to free competition.
Schedule discrepancies
The Germans believe that the baby should not be thrown out with the bathwater. According to them, the sharp rise in electricity prices in recent months is primarily linked to exceptional circumstances with the war in Ukraine and the stoppage of Russian gas deliveries.
“Europe has one of the best performing electricity markets in the world”, says Robert Habeck, the German Minister for the Economy and Climate Action, defending the status quo. This is logical, because the system was designed to favor renewable energies, which have priority access to the network, and are supposed to provide 80% of German electricity production, from 2030.
Even on the timetable for market reform, it is not possible to find an agreement as it stands. France pleads for the adoption of a text in the coming months, Germany believes that nothing should be done before the European elections of 2024. “The decision will be taken at 27”we are assured at the Ministry of Energy Transition.
In the meantime, each side counts its troops. Germany is currently supported by six countries: Denmark, Estonia, Finland, Luxembourg, Latvia and the Netherlands. In a letter sent to the Commission on February 13, they call for the implementation of targeted measures to adapt the market to “new realities of dominant renewable energies”but not for in-depth reform.
France plays the nuclear card
For its part, France hopes to rally more countries behind it, as it did last year by succeeding in imposing a cap on the price of gas, which the Germans did not want. This time the nuclear card will be highlighted. A divisive choice, but assumed, in the name of the contribution of the civil atom to the respect of climate objectives, since it emits almost no CO2.
Agnès Pannier-Runacher, the Minister for Energy Transition, should thus announce, on Tuesday 28 February, the creation of a nuclear alliance with twelve other countries: Bulgaria, Croatia, Finland, Hungary, Italy, the Netherlands, Poland, Czech Republic, Romania, Slovakia, Slovenia and Sweden.
A central subject for Paris
The objective is “to send a strong signal in the various European negotiations”, explains his entourage. This is the case with the revision of the directive on renewable energies and discussions concerning the development of hydrogen, which cannot be massive without nuclear power.
For France, the subject is absolutely central, because it largely conditions the financing of the program to build six new reactors, which is now being considered. But the subject is sensitive and could give rise to variable majorities, depending on the perception of nuclear power, which will not make things easier.
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Czech Republic to replace coal-fired power plants with small nuclear reactors
The Czech public group CEZ announced on Monday February 27 that it intended to launch its first small modular reactor (SMR) around 2032 and two others before 2040. The first PRM will be built in Temelin, near one of the two nuclear power plants, which covers about a third of the total Czech electricity production. The other two will be installed at the current location of coal-fired power plants. The electrician also plans to launch a large nuclear reactor in Dukovany by 2036. At the end of last year, the group received offers from the American Westinghouse, EDF and the South Korean KHNP.