The Government has ordered the demolition of 12 of the 21 hydroelectric concessions expired in this legislature. The Ministry for the Ecological Transition and the Demographic Challenge “has evidence of the end of the concession term or the extinction, since January 2020”, of 21 concessions with just 37.7 megawatts (MW) of power, located in the provinces of Alicante, Asturias, Cáceres, Cuenca, Guadalajara, Guipúzcoa, Huesca, Navarra, La Rioja, Teruel, Valencia and Zaragoza.
Since 2020, the “demolition by the owner” of twelve of them, with 15.38 MW, has been ordered in the Cantabrian, Tajo, Júcar and Ebro basins. Another four (11.8 MW) have been reversed and assigned to the Cantabrian and Ebro confederations to manage them directly. In two (2.8 MW) the extinction file has been initiated. And in three (7.2 MW) that process has not yet begun, explains the Government in a parliamentary response dated September 7.
According to the Regulation of the Public Hydraulic Domain, when these uses are extinguished (in general, they last 75 years, although some have been extended for more than a century), they must opt for their continuity or demolish the facilities. Of those that it has been decided to destroy, most of the power (12 MW) corresponds to the Los Toranes dam (Albentosa, Teruel), built in 1954 and located on the Mijares river (Gúdar-Javalambre region).
This concession expired in November 2020 and was operated by Iberdrola. Ecological Transition ordered the demolition of the dam with the support of various environmental groups, who defend the recovery of the original state of the rivers, as marked by the European Strategy for Biodiversity for 2030, which proposed to return 25,000 kilometers of river courses to their free flow in the EU.
In February, Ecologists in Action, WWF, SEO-Birdlife or Friends of the Earth, among others, sent a letter to the vice president Teresa Ribera in support of the demolition, for “scientific, technical and environmental criteria”, because its energy production is “very scarce” and “its hydroelectric exploitation is not compatible with the preservation of a minimum ecological flow essential for the health of the river ecosystem” .
The dam is “obsolete” and if it is still standing it is because Iberdrola has sued in the Madrid Superior Court of Justice because “it does not want to pay the costs,” says former deputy David Hammerstein, of the Ríos con Vida association.
But some local groups oppose the demolition: from the Government of Aragon to the PSOE of Teruel or the deputy of Teruel Existe, Tomás Guitarte, who in December claimed for Ribera to “correctly evaluate the social impact it would cause”: the dam and the ditches that it feeds “generate wealth in the agricultural, energy and even tourism sectors, by losing two well-visited waterfalls”, and “is an essential point of collection of water in an area of high risk of fires “. Also the PP then became interested because of the infrastructure.
According to Ecological Transition, when a concession ends, many factors have to be combined and “one of the objectives set by the hydrological plans of the third cycle, currently under public consultation, is to recover the river space” so that the water masses “occupy their A natural space”.
“For this, it is proposed, among other actions, the demolition and removal of gray infrastructures that interrupt the longitudinal and lateral continuity of the rivers. These actions are aimed at mitigating the risk of flooding, to help the bodies of water reach the objectives environmental issues and to protect and enhance biodiversity “. Another option is to continue their exploitation. Several of those plans to consult propose giving more power to the State in the management of these infrastructures.
The Government indicates that it is setting “common criteria” to all confederations to “coordinate and guide extinction procedures and the eventual continuity of exploitation of the uses”, so that the reversion meets “the objectives of hydrological planning and programs. of measures associated with the bodies of water affected, as well as the consideration of the environmental requirements derived from the rest of national and regional legislation, especially that which affects protected areas “.
His answer emanates from a question from the PP, which went from being interested in expired dams and the measures “to review the expiration of the concessions” on June 10 to ridicule the idea of a public company of energy in August, when with the price of electricity already skyrocketing, Ribera was opened to that option, which the Prime Minister chilled in September because “it is not part of the coalition agreement.”
This was recalled by Pedro Sánchez on the eve of approving by Royal Decree-Law a temporary cut of 2.6 billion euros to the electricity companies to lower the bill and try to end 2021 at the levels of 2018 despite the exponential increase in the electricity wholesale market due to the rise in gas. The electricity companies are on the warpath against the decree and a bill to discount the extra income they receive from the rise in CO2 and that invites them to renounce hydroelectric concessions if they believe that they will not be profitable when applicable.
The data from that response show the low volume of hydroelectric MW that this legislature has expired. In June, Ecological Transition facilitated an incomplete list with 30 concessions that will expire in the next decade and added more than 700 MW of power, mostly in the hands of the large electricity companies. But the actual bag is unknown.
In a Article On the iagua website, Rogelio Galván, from the Ebro Hydrographic Confederation, points out that it already manages, among others, five dams totaling more than 58 MW “for which the continuity of exploitation has been decided, maximizing public interest.” And it reveals that “in the period 2021-2027 another 19 plants are expected to end their concession period” in this confederation, compared to the six on the Ecological Transition list.
In November 2018, Ribera explained that at that time there were 115 hydroelectric exploitations of intercommunity basins that were extinct. About a hundred were abandoned and with little apparent economic profitability. In addition, 25 concessions were expected to expire until 2020 and 70 until 2030.
Among those who support the State to directly manage this resource is the former president of Red Eléctrica Jorge Fabra, who defended in a recent interview that would allow “complementing electricity production when other renewable technologies have valleys, protecting the ecological health of our rivers and guaranteeing irrigation, flood control and the supply of drinking water without interfering with spurious economic interests”, and “compensating the territories that support the power plants and suffer the consequences of territorial inequality “.
Diego Rodríguez, professor at the Complutense University of Madrid and counselor of the National Commission of Markets and Competition (CNMC) until 2017, points out in a Article published this month by Fedea that “it is perfectly possible” that, once the concessions expire, they are managed by that public company. “The question is whether this affects any pattern of behavior other than if the company were private” and whether “it could have a systematic and significant effect on prices.” He doubts it.
Thus, “in the case of the power plants (many hundreds) that use non-dammed or flowing water, it is obvious that there is no alternative to be able to generate at another time and, therefore, they go to the market as accepting prices, with zero prices. or close to zero that allow them to sell the energy produced “. But those that have reservoirs can choose when they produce “and the optimal thing is to do so with a view to maximizing their value.” Regardless of whether they are in private or public hands, “this decision is the most favorable for the company but also for consumers.”
“If the price in one hour is high (let’s say 14 pm, with a price of € 80 / MWh), and it is expected to be lower in the future, the private company will try to turbine more in that hour, which obviously It increases the offer and reduces the price. What would the public company do? Not turbine at that time and do it, for example, at 2 am with a market price of € 40 / MWh, thus giving up a large part of its income potential without resulting in a clear benefit to consumers? ”
“If the objective of the company is to sell electricity produced with hydraulics at cost, what incentive will it have to offer it at the opportunity cost, which is the best way to manage water?” ICAI professor Pedro Linares. Regardless of whether it is in public or private hands, “hydraulics must be offered at the opportunity cost so that its management is appropriate”; otherwise, it would produce when wholesale market prices are low, “which is when it is not needed, and not producing when prices are high, which is when it is really needed.”
Diego Rodríguez does believe “absolutely necessary” that the new concessions adapt “to the current circumstances, extracting the scarcity rents from the resource.” The current ones, many of the Franco dictatorship, “took place in a totally different economic and social context.” And future terms should be “drastically reduced”, with “periods of no more than 15 or 20 years”, avoiding “being locked into a very long-term relationship in a context of energy transition subject to high uncertainties.”
The professor also calls for “a more adequate extraction of the value of this scarce resource. This can combine concessionary auction systems together with specific fees for the use of this resource.” And “providing transparency on the characteristics of the concessions for current hydroelectric use is a necessary condition to begin this discussion, since the intricate system of water governance in Spain means that this information is not publicly available,” adds Rodríguez.
In his article in Fedea, where he is an associate researcher and directs the Digital Economy and Energy area, he recalls that “it has been considered an anomaly” that in August the hydroelectric mark prices in the wholesale market. “To explain this we must start from the fact that, from the point of view of its use for the electrical system, the water has to be poured maximizing its value”, which determines its opportunity cost. Being a limited resource, “it must be used to maximize this value for all consumers.”
“Although formally it is the hydroelectric plant that frequently closes the market (and thus appears in statistics as marginal technology), the underlying cause for the high market price is the high cost paid by the cycle plant”, which burns gas, explains Rodríguez. The hydroelectric power plant offers “at a price very close to that of the cycle and enters the match closing the market. The alternative would be for another cycle to enter, or for the previous one to produce a little more (assuming it was not at its maximum capacity). but in that case, the increase for that additional amount will certainly be greater than the alternative of being covered with that hydroelectric power station, since the price is offered increasing by steps. “