The electricity market is being led to financial asphyxiation as – besides Public Power Corporation’s liquidity problems spreading like a virus – the government’s failure to implement the structural measures needed for its full liberalization will result in expected revenue losses of 80 million euros for independent producers.
These losses stem from revenues provided for by the temporary mechanism of the Power Availability Certificates, which compensates natural gas and hydroelectric producers for the flexibility they provide to the grid. The mechanism, which expires in end-2019, has the approval of the European Union.
The European Commission mandates the operation of new markets according to a target model that was supposed to start in April 2019 but has been put off to early 2020 due to delays. As a result, the EU has frozen the process of auctions for the supply of flexibility services, meaning that the units that would participate in the mechanism will be deprived of revenues of 80 million euros, which has shifted the majority of the sector’s companies to losses.
In an effort to address the problem, the Energy Ministry has initiated talks with Brussels hoping to disassociate the auctions from the target model, as this is not expected to start applying before the expiry of the approved mechanism by year’s end.