The 27 EU countries are trying to unblock the reform of the electricity market

“Our commitment is to find an agreement today. There is no reason to justify further postponement,” insisted Spanish Energy Minister Teresa Ribera before a meeting in Luxembourg with her European counterparts.

French President Emmanuel Macron welcomed last week, after a meeting with German Chancellor Olaf Scholz, the desire of the two countries to conclude an agreement "by the end of the month". “Intense” bilateral discussions have taken place since then, but a compromise remains uncertain.

A new proposal from the Spanish presidency of the EU completely removes from the text the controversial issue of the support system for existing nuclear power plants, unacceptable for Berlin, which wishes to regulate this system at European level to avoid distortions of competitiveness.

“The Spanish proposal tries to resolve a major problem for the internal market by ignoring it, which does not eliminate it,” said German Economy Minister Robert Habeck.

After the surge in electricity prices last year, the reform intends to reduce the bills of households and businesses thanks to long-term contracts to smooth out the impact of the volatility of gas prices.

It is also a question of ensuring more predictability for investors: any public support for new investments in the production of carbon-free electricity would be done via “contracts for difference” (CFD) at a price guaranteed by the State.

In this mechanism, if the wholesale market price is higher than the set price, the electricity producer must return the additional revenues earned to the State, which can redistribute them. If the price is below, the State pays compensation.

However, the initial proposal extended these CFDs to investments intended to extend the life of existing nuclear power plants. A cause for alarm for Berlin: Germany, having left nuclear power, fears competition, which it considers unfair, from French electricity made more competitive thanks to massive public support.

Conversely, the subject is crucial for France, keen to finance the repair of its aging nuclear fleet and to maintain low prices, a major asset for its manufacturers.

"Red line"

This debate comes at a time when European manufacturers are worried about their competitiveness, between soaring energy prices and massive subsidies for green industries in the United States.

In a counter-proposal presented on Tuesday, Robert Habeck defended the imposition of European criteria on all CFDs applied to existing power plants, "ensuring that the revenues generated do not distort the conditions of competition" when they are redistributed to industrial, under strict supervision from Brussels.

France intends to benefit from its energy choices, at a time when Germany is suffering both from the loss of Russian gas imports, on which it had become dependent, and from the abandonment of nuclear power, which forced to revive coal.

"There are questions about the risk of distortions of competition. I am very surprised: the cost of historic nuclear power is in the same waters as the cost of renewable installations", wind and photovoltaic, argued the French Minister of Energy. the Energy Transition, Agnès Pannier-Runacher.

"I would not like this to be the pretext for discrimination against nuclear power (...) France is negotiating in good faith, with a very clear red line: we cannot discriminate against nuclear power, "carbon-free energy" which balances the system (faced with the intermittency of renewables), secures the supply of Europeans and lowers their bills,” she insisted.

If the text can be validated by a qualified majority of States, Madrid intends to have the approval of Paris and Berlin.

Suspended from the compromise of the two powers, certain countries did not hide their annoyance: "the EU is not limited to France and Germany", lamented Belgian Minister Tinne van der Straeten.

Another subject was debated: “capacity mechanisms” which allow States to remunerate the unused capacity of power plants to guarantee their continued activity and avoid future electricity shortages.

Several countries want to be exempt from the planned ecological constraints, notably Poland, wishing to apply this tool to its coal-fired power plants.