Foronuclear warns of early Spanish nuclear exit

The Council of Ministers approved a Royal Decree-Law aimed at fulfilling a commitment made by President Pedro Sanchez to maintain the final electricity bill of consumers in 2021 at the same level as in 2018. The measures will reduce the monthly bill by 22% until the end of the year. This reduction will amount to 30% if added to the VAT reduction from 21% to 10%, for supplies up to 10 kW, that was approved in June.

The Royal Decree-Law includes temporary measures, such as extending the suspension of the 7% tax levied on generation until the end of the year; reducing the rate of a special electricity tax from 5.1% to 0.5% - the minimum allowed by EU rules - and increasing the amount collected through the European CO2 auctions to cover costs of the electrical system from the EUR1.1 billion (USD1.3 billion) budgeted for 2021 to EUR2.0 billion.

These measures are in addition to two bills that the government has already sent to the courts for approval, and for which the Council of Ministers also approved their processing through the emergency route. The first creates the National Fund for the Sustainability of the Electric System, which will redistribute the cost of historical renewables among all energy vectors. The second acts on the "excess remuneration obtained by non-emitting power generation plants in the wholesale market thanks to the impact of gas costs that they do not support." It will impose a levy on the revenues of non-CO2 emitting electricity generating plants since 2003. The bill would cut the income received by nuclear power plants, 80% of the installed hydroelectric power and wind farms prior to the publication of a European directive on 25 October 2003, which created the European CO2 market in 2005.

Through these measures, the government expects to recover some EUR2.6 billion from energy companies by the end of March next year for the return of "extraordinary profits" due to high gas prices of gas in the wholesale market. According to a statement from the Ministry for the Ecological Transition and the Demographic Challenge, since June the price of the wholesale electricity market has increased by 80%, reaching record levels, as a result of the jump in the price of natural gas in international markets and the high price of carbon in the EU. It added, by March 2022 it is expected "tensions in the global gas market will have been overcome".

Industry warning

"This bill should not apply to nuclear energy," Foronuclear said on 14 September. "On the other hand, the Royal Decree-Law approved in the Council of Ministers today, even though it is of temporary application, goes even further into penalising nuclear power generation."

Referring to the draft law that acts on the remuneration of the CO2 not emitted from the electricity market, the organisation said: "The terms which it proposes, together with the current excessive tax pressure, would lead to the cessation of the activity of the entire nuclear fleet."

It added, "In the event that this bill is approved and enters into force, the real sale price of nuclear electricity generation, once the price of CO2 has been reduced, should not be less than EUR57-60 per MWh with the level current tax. Otherwise, the continuity of Spanish nuclear power plants would be impossible."

Applications to extend the operation of Spanish plants would not have been applied for had the bill already been in force, Foronuclear said. "Therefore, at the time of application, and in order to carry out the necessary investment decisions, the EU emission allowance allocation mechanism and the international market price of CO2 were taken into account," it noted. "Should this draft Bill have been in effect, the renewal authorisations, some of which are very recent, would not have been requested." Investments totalling EUR3 billion are planned to be made until the end of the operation of the nuclear fleet in 2035.

Foronuclear said the impact of the draft CO2 law as it currently stands combined with the current "excessive" taxes paid by Spanish nuclear operators will total some EUR30/MWh. It expects electricity prices to fall below EUR50/MWh by 2024 due to "the massive entry of renewable energies into the system with marginal costs tending to zero." This, it warned, would lead to nuclear's "economic-financial unfeasibility and would lead to the early cessation of the activity."

"The premature cessation of the power generation technology that produces the most electricity in Spain and prevents the most greenhouse effect emissions would lead to a disorganised closure of nuclear generation, with the resulting loss of jobs and industrial fabric, to a growing energy dependency from overseas and to an increase in price volatility in the wholesale market," said Foronuclear President Ignacio Araluce. "It would also make it impossible to comply with the objectives of Spain's National Integrated Energy and Climate Plan for 2021-2030, especially as regards the reduction of CO2 emissions, since the closure would cause an increase of around 22 million tonnes per year."

Spain's seven nuclear power reactors (with a combined capacity of 7.4 GWe) generated 22% of its electricity in 2020. Under the country's nuclear phase-out plans, four reactors are scheduled to close by the end of 2030, representing around 4 GWe of capacity. The remaining three reactors will shut by 2035.