In this week’s article, Fernando Soto, CEO of AEGE, reflects on the strong impact of the extra cost of electricity supply on the competitiveness and viability of electro-intensive industries. It is such a crucial factor that it puts the activity of Spanish industries at a disadvantage towards their international competitors. This is the reason why Soto argues that if there is a sector really interested in the economy decarbonization and in the efficiency capable of reducing the demand for energy, it is the large consumers of energy. AEGE calls for a low carbon economy that offers a truly competitive power supply.
The electro-intensive industry is seriously committed to the economy decarbonization and the guarantee of electricity supply. It is not a phrase, it is evidence: on the one hand, its constant improvement of the energy efficiency of its industrial processes allows a reduction of energy consumption per unit of manufactured product; On the other hand, its consumption pattern is essential to flatten the electricity demand curve and reduce the consumption peak. This characteristic makes the electro-intensive industry a major ally of renewables because its role favors the integration into the electrical system of these electricity generation sources. This is turn enables the fulfillment of our country´s objectives in terms of its international agreements to combat climate change. Finally, these industries collaborate with the System Operator, providing the interruptibility service 365 days a year, which translate into guaranteeing the electricity supply.
The industry must play a proactive role as an electrical consumer that needs to develop its industrial activity on equal terms with its European competitors
Spain has undertaken a decisive battle for the climate – something that is obviously very positive for the future of all- and in which the industry can and should play a key role, a proactive role as an electrical consumer that needs to develop its industrial activity on equal terms with its European competitors, enhancing the value of its indisputable leadership in energy efficiency, waste recycling and in improving its productivity.
Integration of renewables and long-term bilateral contracts
Being granted long-term bilateral electricity contracts at competitive prices is one of the Large Energy Consumption Companies (AEGE)´s historic demands. Now it appears that a possibility opens up with the latest renewable auctions and the need for developers of this type of generation to find consumers willing to sign long-term bilateral contracts to help them get funding for their 8,000 MW investment projects (wind and photovoltaic, mainly). At AEGE we are truly interested and involved in this debate. From the electro-intensive industries, we believe that figures should be designed to encourage and promote this type of agreements for the benefit of renewable developers, their industrial clients, and the Spanish society as a whole.
The electro-intensive industry needs an appropriate energy transition that guarantees the supply without increasing the price of electricity. Therefore, it is necessary for government officials to set scenarios of the evolution of a generation mix that guarantees the achievement of environmental targets without putting the electrical system or customers who need this energy at risk and without unbearable extra costs that reduce competitiveness
AEGE is committed to a sustainable energy transition also economically
We welcome the new Government´s broad vision in terms of ecological transition and from the electro-intensive industries we offer them full collaboration. We trust that any decision will be studied and solved and, despite the difficulty of the challenge, we consider it necessary to do it with the maximum agreement. We must harness this energy tsunami to strengthen our industrial fabric and we need political forces to understand what is at stake when it comes to achieving a sustainable Spain also in economic terms.
From the industry, the challenges of the energy transition are viewed as real opportunities for progress
From the industry and from AEGE, the challenges of the energy transition are viewed as real opportunities for progress and, therefore, we hope that the efforts being made and all that is being planned result in a reliable electricity supply and prices that converge with those paid by our European competitors. Our industries present and future competitiveness and viability depend on it.
It is evident that the industry’s efforts in recent years to improve their production processes and increase energy efficiency have been neutralized by the extra cost of electricity supply compared to its international competitors, which has penalized and diminished our industrials competitiveness. We are talking about strongly exporting companies who view with concern how their global activity is increasingly at risk due to the cost of electricity supply in Spain.
Industry is one of the sectors that devote most of its efforts to technological research and innovation and waste recycling
I must remind you that the industry is one of the sectors that devote most of its efforts to research and technological innovation and waste recycling. The basic industry associated to AEGE results in qualified, stable and quality employment, technological development and creation of wealth for the country. If we trully want to boost all those valuable attributes, it will be necessary to correct the main obstacle to be overcome: the lack of a competitive, stable and predictable electric price.
In short, we hope that Spain will succeed with the new Law on Climate Change and Energy Transition, whose draft will be taken to Congress before the end of 2018. From AEGE, we are confident that the great challenge of developing a low-carbon future economy, which contribute decisively to the fight against climate change, be harnessed to provide basic industries with a truly competitive electricity supply framework. This is the only possible formula to have a strong and competitive electro-intensive industry that develops its activity in a sustainable, stable and legally certain manner and that continues to be an engine of economic growth and generation of wealth and employment in our country.