Yesterday, the Contentious-Administrative Chamber of the Supreme Court authorized Naturgy to have the right to temporarily close five combined cycle plants that together have a production capacity of around 2,000 megawatts (MW), although the high court denied it. receive compensation for the time they have remained open.
The ruling refers to an appeal that Naturgy presented on May 25, 2017, requesting the temporary closure of those five plants: Palos de la Frontera 1 and 3, in Huelva; groups 2 and 3 in Cartagena and a group in Sagunto (Valencia).
The company addressed various instances of the Ministry of Energy on two occasions, alleging that, “due to the low load factor, the plants had been affected with economic profitability much lower than that necessary to recover the investment.” At that time, coal was one of the basic energies in the energy mix. Naturgy received administrative silence in response. Without express authorization he could not close so he went to court.
The truth is that the resolution comes at a strategic moment for the sector. Coal has disappeared from the Spanish energy mix, renewables are booming and, more importantly, combined cycles are key elements to guarantee the security of the system.
After the outbreak of the war in Ukraine, data from REE, the regulator of the Spanish electricity system, confirm that combined cycles contribute an average of 20% to electricity production. That is, they have become strategic to guarantee security of supply. Much more so when another of the energies that served this function, nuclear, is about to enter the dismantling phase.
Naturgy's legal services "are analyzing the ruling and still have no comments on it," the company says.
The truth is that obtaining the right to close does not mean that they are going to close those plants, because perhaps now they are not even interested. “But the ruling not only affects Naturgy, it establishes jurisprudence and gives energy companies strong negotiating power with the Government,” explain sources familiar with energy regulation.
“Justice grants the right to closure when a plant is not profitable and if the State wants to guarantee that they remain in service to guarantee supply, it must ensure that energy companies receive adequate compensation for always being available,” these sources explain.
This is what in the jargon is called “payments for capacity”, an issue that energy companies have been demanding from the Government for months and to which the Minister for the Ecological Transition has opened her hand in recent weeks. After this ruling she will have fewer arguments to be stingy by compensating the gas plants.
