Moderated by Mário Paulo, Chairman of ERSE’s Advisory Board, ELECPOR’s Director General, Maria João Coelho, was part of the panel dedicated to Generation and Wholesale Markets, together with Pedro Amaral Jorge, CEO of APREN, David Rivera Pantoja, Country Manager of Iberdrola Portugal, and Ana Paula Marques, Director of EDP.

In its speech, ELECPOR highlighted 5 key messages:

1. Energy price decoupling in MIBEL (market splitting): in 2024 it occurred in 6.2 per cent of the hours, and has been increasing since 2021. Although the price differential between PT and ES may, to a large extent, be due to the increased penetration of renewables, particularly with solar production in ES, and it is essential to balance renewable production in PT, it was emphasised that the occurrence of periods with market separation is an issue to be taken into account, and it is an essential requirement to ensure the necessary interconnection capacity.
2. Price volatility, and in particular low, very low or even negative prices, can discourage new investments, particularly in renewables, whose initial investments are essentially fixed costs. Market conditions must therefore be created to make these technologies viable and profitable. Greater price stability and predictability are therefore needed to guarantee more stable returns. In this context, long-term contracting was emphasised, strengthened under the recent reform of the electricity market, namely PPA – Power Purchase Agreements and CfD – Contracts for Difference.
3. The electricity market is not confined to the spot market, which is marginalised; it is made up of various parts, with different purposes and which are complementary to each other, including forward and futures markets; PPA and CfD; the system services market; capacity mechanisms, among others. It has therefore been pointed out that action in the electricity market must take into account all of these parts.
4. Flexibility needs in the electricity system are expected to double by 2030, given the increasing integration of renewable, variable and distributed generation. Currently, a significant part of flexibility is found in the provision of frequency system services (balancing services), but the trend will be for other local flexibility services to emerge, more associated with congestion management. It will therefore be essential to rethink system services as a whole, with the basic principle of contracting all system services according to competitive, open, technologically neutral and transparent market mechanisms. Even today, and although there has been significant progress with regard to balancing services, it is crucial to dynamise the system services market according to this principle, in particular by eliminating the compulsory and unpaid services currently in force.
5. As capacity mechanisms are a structural element of the electricity market, in the light of European regulations and also Decree-Law 15/2022, and with a national assessment that identifies the impossibility of meeting the security of supply standard in almost all the horizons of the scenarios considered (RMSA-E 2023), and also with the Spanish capacity mechanism at an advanced stage of approval and subsequent implementation, for ELECPOR, the adoption of a capacity mechanism in Portugal is a priority and an urgent matter. Failure to do so not only increases the risk to the country’s security of supply, but also places Iberian producers in an unequal situation.