Ángeles Santamaría (Morocco, 1961) has been CEO of Iberdrola Spain since February 2018. The country subholding manages more than 50% of the renewable capacity installed by the group in the world. An industrial engineer from the Comillas Pontifical University (ICAI) and PDG from the IESE Business School, she has been linked to Iberdrola for more than two decades in the development of its transition strategy towards a model based on renewables. The board talks with Five days and advocates a structural reform of the energy system and the gradual disappearance of the regulated electricity tariff (PVPC), in line with other European countries.

The price of electricity reached its historical maximum last week, how much can it go?

I do not know how far it can go, but it is enough where it has arrived, right? I put myself in the shoes of the consumer, our own and even those of the Government and there is concern and concern because we are at levels that we have never seen. It is important to say, although it is not a consolation for anyone, that we are not an exceptional case in our environment. All countries are at similar levels. So far this year, the averages are similar. In Spain we have an average of 62 euros / MWh; in France, at 61; in Germany, at 58; in Italy, at 70, and in the United Kingdom, at 81.

Why is this so exorbitant rise taking place?

The origin is in the rise in prices of gas and raw materials in general, such as copper or steel. The case of gas is very striking because it has risen a lot and indicates that China has become the major importer. Warehouses, in general, are at a low level after a cold winter and now we are in a time of high demand for electricity associated with the recovery of activity, which has caused gas prices to quadruple in Spain. CO2 emission prices are also high. For every euro that gas rises, the price of the activity rises by two euros and for every euro that the price of CO2 rises, that of electricity rises to 0.33 euros per MW. The main cause is the price of gas.

The design of the regulated tariff could be made more stable and less subject to irregularities

Does the regulated electricity tariff (PVPC) make sense in this context of rising prices?

The regulated rate, set by the Government and to which consumers of up to 10 KW of contracted power can be accommodated, is by law linked to the hourly market prices, so that any rise and fall is transferred to the consumer, who is the one who less management capacity has of its consumption. As a consumer, I would like to have some predictability of what my electricity is going to cost me and not be worried about whether it goes up or down. In other countries such as the United Kingdom, reference is made to a basket of installment markets and the price is more or less fixed for three / six months or a year, so there is no continuous shock and this current alarm, and it provides certainty. The design of the PVPC is a problem, worrying about not knowing what you are going to spend, being connected to a market that you neither understand nor have to understand. I would say that our regulated tariff is unique in Europe and does not bring us anything good. We have proposed solutions of similar design to other countries such as Italy or the United Kingdom, or to provide energy to this type of consumer with contracts with technologies that can give stable and competitive prices, such as nuclear power plants.

The government argues that it has already lowered taxes on electricity and that it is the EU that has to reform the price formation mechanisms. Is the Executive doing enough to avoid electricity being so expensive?

I don’t like to evaluate whether or not the government is doing enough. What I am saying is that it can make the PVPC tariff design more stable and less subject to these irregularities. In addition, it must be remembered that there is a recommendation from the European Commission that regulated tariffs be restricted and tend to disappear in order for the electricity commercialization market to function as flexible as possible. The tendency of the EU is to let the market work, the competition to work. On the other hand, it is worth saying that to consumers who are in the free market, who normally have a fixed price with their marketer, the Government has transferred a tax reduction of five euros via temporary VAT reduction. On the other hand, those who are with a regulated tariff have not seen it that way, since, with the increase in prices, they have actually noticed a rise of four euros per month in the end compared to recent years. What a paradox! In the same way, it is not true that the vast majority of consumers are affected by the rise in light. These latest increases are not affecting whoever is in the free market, with fixed contracts.

It is not true that the majority are affected by the latest increases in the price of electricity; the market is free

In your opinion, what measures should be taken?

In the end, only 35% of the electricity bill is directly related to the costs of electricity production, then there are the costs of transmission, transport, distribution and numerous taxes that go to the final consumer. One of the measures would be a global restructuring of taxation and try to clean the bill of everything that is foreign to the consumer and that he pays for electricity, and not for previous energy policies. This would be very important to make electricity more competitive and favor electrification, which is the way the EU is going.

Does the new fund to pay for renewables (FNSSE) proposed by the Government make sense?

Yes, it makes all the sense in the world. It is in line with the EU, as it consists of progressively spreading the cost of the energy transition among all energy consumers. For example, in Germany a law has been approved that sets rates for emissions in transport, with the aim of financing the cost of historical renewables. It makes perfect sense because one of its objectives is decarbonisation, which is going to electrify a lot of consumption. The idea is aligned with offering clean energy. According to Red Eléctrica, 65% of electricity in 2020 no longer produced emissions, therefore electrifying makes perfect sense.

The motor calls for 340,000 charging points in 2030 to develop the electric vehicle, is it feasible?

As far as we are concerned, we are carrying out our entire recharging infrastructure deployment plan. One of the problems we have is administrative procedures, long and complicated. The bureaucracy cannot stop us on this matter and it is happening. You have to push from the administration to pave the way.

It warns: the lower remuneration for nuclear and hydro “worries” investors

The Government has launched a plan to curb the overpayment perceived in the wholesale market by the generation of energy through non-CO2-emitting power plants (hydraulic and nuclear) prior to 2005, which would translate into a cut of 1,000 million in the dividends received by companies. Santamaría is critical of this: “Although the Executive’s message is orthodoxy, it is seen with great concern from the investors’ environment and this is also transmitted to us by our contacts.” In addition, it warns of the “legal uncertainty” it is generating, and trusts that the rule can be modulated in the parliamentary process.

The CEO of Iberdrola Spain warns that a measure like this can have a “contagion effect” and be “destructive and harmful” for the European CO2 emission rights trading regime. In addition, it ensures that the Government’s draft law “starts from several false hypotheses.” In his opinion, and contrary to what the Government defends, the plants are not amortized and neither do they receive undeserved income. “It starts from false premises and ignores the economic reality of the plants, which have increased their tax rates and charges enormously. You cannot make a decision of this style without taking into account all the economic circumstances ”, he insists.

On the contrary, it does support the roadmap for the development of offshore wind and offshore energy in Spain. Ecological Transition proposes to reach between 1 and 3 gigawatts (GW) of floating wind power in 2030. Although Santamaría remarks that it is still in public hearing, it is a “ostentatious” document of where the country is going in this technology. “We see well that it is supported, but we have to see in which areas it will be available. It must be studied so that it can materialize. The application of European funds is an excellent opportunity for this issue as we are already doing ”, he points out.

In this sense, and in line with the words of the president of the company, Ignacio Sánchez Galán, who said that Iberdrola is studying a spin-off of its offshore wind business, Santamaría advances that Iberdrola will also study solutions for floating technologies. However, he remarks that in the country it is a “very emerging business” due to the great depths of the sea. “It is one more option,” he adds.

Bubble in renewables

Powerful energy companies such as Acciona and other recently created groups are listing their renewable subsidiaries with mixed success, in an environment of certain depletion of demand. Santamaría expresses that success in the trading floor depends a lot on the expectations of the company, its financial strength and the projects it has in its portfolio.

When asked about a possible bubble for renewables in Spain, she states that access and connection permits have been granted for more than double what is set by the Integrated National Energy and Climate Plan for 2030. “Call it a bubble or over-demand, but there is an excess of Projects. All will not be able to materialize due to lack of financing or other problems ”, sentence.