Carmen Becerril, president of the Electric Market Operator: “We have to get used to more volatility in the price of electricity”

Carmen Becerril is a member of the Superior Body of Civil Administrators of the State and has held many positions of high responsibility in the energy sector both in the public and private sectors. Since September 2018 he has presided over OMEL, the Electric Market Operator that manages the price of electricity in Spain and Portugal.

The electricity market was the protagonist in January due to the sharp rise in the cost of electricity and some part of the Government doubted its proper functioning.

The market works perfectly taking into account that it responds to two external stimuli: the behavior of demand, if it rises as happened with Filomena, the tendency is for the price to rise, and the weather. The market price depends a lot on what is the contribution of wind, sun and water in the system. When these technologies fail, it is necessary to resort to thermals such as gas and coal combined cycles, whose fundamentals are more expensive. The volatility in the price of C02 has also influenced, which has gone from 25 to 40 euros per ton in one year.

We have gone from one of the most expensive January in history to one of the cheapest February. Is this huge volatility normal?

Electric power is 35% of the total bill, everything else corresponds to charges for different concepts and taxes. That alarm that we have seen in January, with the most expensive hour of 120 euros of megawatt hour, must be relativized, since at most it will be one hour within all those of the month. However, it has not been published anywhere that on February 9 we had a price of 0.16 euros megawatt hour. Volatility is an element that is very present, but the consumer has the possibility of contracting flat rates with long-term price visibility. This price has a hedge, so being on the open market is more advantageous but you have to assume that in summer and winter the prices are higher and in spring and autumn they will be higher. low by the elements of meteorology. We have to get more and more accustomed to volatility, since renewables will make the price extremely cheaper, but when they are not available it will tend to rise.

Does the market need some kind of reform as Podemos proposes to eliminate what they call “profits fallen from the sky” of the electricity companies?

On days when the price is 120 euros per megawatt hour, one can speak of profits that have fallen from heaven, but when it is 0.16 euros, it should be damages that come from hell or something similar. Beyond the fact that it is a decision of the regulators, we must bear in mind that the market model is the result of a European consensus where 22 countries every day at 12:42 p.m. we publish our prices considering supply and demand and all the connection capacity. An algorithm is used that establishes a single, shared and very consistent system in terms of the model for preparing the price matching. From the point of view of autonomous decisions by the Spanish legislator, the margin is relatively narrow. European models tend to be more resistant to change than the volatility of national governments.

That is, cannot the current marginalist system be changed (through which the last matched supply sets the price for all agents)?

Today it is the center of the market model at the European level. It is possible to establish nuances or complements such as auctions for new renewable power, which represent another layer of the market by having a fixed price for 12 years.

Was the reform that linked the regulated tariff or PVPC to the hourly variation of the wholesale price of electricity a good idea or did it add more confusion?

For the informed consumer it was a good idea because it is a very transparent model of energy price transfer. However, it is most striking when the price hits highs and opens newscasts, and goes unnoticed when it hits lows. The informed consumer knows that in the middle of Filomena he absorbs a peak price, but he also knows that there are very cheap hours.

He talks about an “informed consumer” but according to the CNMC the vast majority of the population does not understand the electricity bill. Why?

It is a very boring subject. Getting to understand all the elements that are part of the tariff and what are the decisions to be taken is relatively complicated. My impression is that the entire energy transition process that we are facing is going to lead to an increasingly important part of the population being concerned about these issues and coming to understand what they mean. The arrival of the electric vehicle, for example, will force certain decisions to be made about when it is most important to charge the car. We will launch an APP in the coming months that aims to give the daily price so that consumers can make their decisions.

This sounds to me like what former minister Josà © Manuel Soria was saying about the potential benefit of turning on the washing machine at 03:00 in the morning, although I doubt that many people end up doing it …

Without a doubt, since after putting in the washing machine you have to hang the clothes and the cost is euro cents. It is true that when the electric car is in our lives more continuously, we can match the recharging of the car with the cheapest hours using technology. Likewise, self-consumption is increasingly being promoted. At that time, you can also make different decisions and move towards daytime consumption, which is when the solar panel is providing energy. What we call energy transition offers solutions within the reach of many people who, without the need to be experts, will lead them to change their behavior. That will be the real revolution.

Will consumers notice this drop in prices linked to renewable energy?

It will go down particularly during daylight hours in a latitude like Spanish. We have spent a lifetime using the sun to call tourists, and now it is going to allow us to generate a large amount of energy. It is an unequivocal opportunity to have a significant electricity export capacity, and it would be highly desirable that the interconnection percentages that should reach 15% in 2030 be promoted to ensure an economic return for the country.

If renewables are already competitive in the market … Why are fixed price auctions necessary?

Renewables are undoubtedly competitive on their own. Its uniqueness is that its economic cost is defined by the investment cost of the first moment. The financibility of these facilities often involves having visibility on the return on investment. This is evident when you are assigned a 12-year price and more diffuse if you are going to participate in the market price. They are, in conclusion, a way to encourage investment by making financing cheaper and easier.

Where in the energy sector should European funds focus to boost decarbonisation?

The big line is called electrification, which has many vertices: transport, air conditioning or green hydrogen that is so much talked about now in Europe. The other two aspects that must be highlighted are the new position of consumers and their empowerment, making all those possibilities that are going to open to them in terms of charging their electric car, selling the light generated by their panel affordable. photovoltaic self-consumption …

Self-consumption and electric cars are things we have been talking about for years but they have not quite taken off. Why?

When I was general director of IDAE, in 1998, we launched a presentation program for the electric vehicle. It was a waste of effort. Technological changes are paths that are slowly being reached with many processes of trial and error. However, if 20 years ago they had told me that today photovoltaic and wind power would be the most competitive and dominant energy sources in the energy mix, it would have been difficult for us to believe. Probably in other sectors there are changes that can be implemented in a more disruptive way, in the case of energy there is a lot to replace and it is not easy. The transition will come little by little, we cannot go crazy.

You experienced the takeover process for Endesa from within, which ended with its sale to Enel. What is your opinion of the one launched now by the IFM fund on Naturgy?

It is the sign of the times. What must be guaranteed is that the type of capital that reaches this type of company is committed and reliable.