Competition is in favor of the orderly closure of coal power plants

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The  CNMC  considers that the  Ministry of Energy, Tourism and Digital Agenda  assumes excessive powers in the case of allowing or denying the closure of coal-fired power plants. The report points out that the new criteria for proceeding with the closure of a plant or the auction to transfer it in case the owner does not want to continue operating it, involve excessive discretion and legal uncertainty. Furthermore, adds the  CNMC , neither the  Electricity Sector Law  nor European regulations contemplate these requirements.

The aforementioned report adds that the Spanish system has excess capacity, so it could do without a significant part of its coal plants, as intended by  Iberdrola , a company whose Email Data strategy involves producing from renewable sources and has announced its intention to close coal-fired plants.

In this sense, the CNMC considers that the closure of plants must be addressed globally and by reviewing the start-up, hibernation and definitive closure procedures.

The  Minetad  intends, in the event that a company renounces the operation of a plant, to hold an auction to avoid closure in the case of combined cycle, coal or nuclear plants. Under current regulations, the owner who wants to close a plant has to ask permission from the Administration, which will evaluate whether the closure endangers the electricity supply, whether it will affect prices, competition, raw materials or planning objectives.

The Minetad royal decree   adds that, if the closure is denied, the owner of the plant may transfer the plant to third parties or open an auction procedure. Even if there are no interested parties, the Ministry may award it to a third party in exchange for compensation.

The CNMC considers that the new criteria create legal uncertainty for new investments and are counterproductive to competition in the electricity sector.




Contrary to European regulations

Furthermore, the  Commission  recalls that they could go against the European regulations contained in the  European Commission's Proposal for a Regulation  relating to the internal market proposed in the Winter Package.

Regarding the auction mechanism proposed by the Royal Decree, the  CNMC  considers that it is very complex and adds that the award to a third party in the event that the auction is void would be  "state aid in accordance with European Union regulations. which recommends that the European Commission be notified in advance of the proposal.”

Finally, the CNMC recalls that the Spanish electricity production system is oversized and could do without  “a significant part”  of the current coal plants.