Coal cuts Spain's power bill by €350 million a year, user says

The report that puts the cost of closing coal at €350 million

An internal Ministry of Energy report put a figure on the closure of domestic coal: a 3.52% average rise in the wholesale electricity market price and more than €350 million a year in extra costs for consumers. The figure is almost fourteen times the €25.3 million the state was then spending on annual aid to domestic coal. The data came to public attention in July 2017, with coal plants still running and mines on a countdown.

The debate that trinc, and which has dragged on for almost a decade, was not so much about the calculation as about what to do with it. A report that measures the cost of doing without something is not the same as a defence of that something. That misunderstanding, more or less deliberate, ran through the whole affair.

How much does domestic coal reduce the electricity bill?

According to the document, doing without domestic coal plants would raise the wholesale price by an average of 3.52%: more than €350 million a year that would end up being paid by consumers. Against that figure, subsidies to coal totalled €5.5 billion since 1990, and at the time of the report annual aid had fallen to €25.3 million. Those who defended keeping the plants highlighted precisely that difference: a saving fourteen times greater than the public cost.

On the other side weighs another argument. The plants already exist and their continued operation does not require burning domestic coal. The shortfall in installed capacity described in the report would be covered by the same plants burning imported coal, not by reopening the mines.

Coal is not a homogeneous product

Here appears the technical nuance that tends to disappear from headlines. A thermal power plant is not a domestic boiler: it is designed for a specific type of coal. Adapting a plant designed for domestic lignite to imported coal involves a costly change of mix and a minimum one-year shutdown. This was already done at the As Pontes plant in A Coruña, which replaced local lignite with imported coal. The conversion is neither free nor instantaneous.

So the famous 3.52% does not measure the same for everyone: if the plants are kept but the fuel is changed, the extra cost shifts from the market to the utilities' balance sheets. And if they are closed, to the consumer.

From 38.8% of generation to 14% in sixteen years

Red Eléctrica data allow us to gauge the scale of what was being discussed. In 2000, when the electricity bill was half what it was in the trinc decade, coal plants totalled 12,052 MW and generated 79,846 GWh, 38.82% of all energy produced. In 2016 they generated 37,038 GWh: 13.95%. Triple in relative terms and double in absolute terms, in just sixteen years.

The international comparison used was Germany: the country produced around 40% of its electricity from coal. Over time that percentage has deflated to 30% or less, weakening one of the most repeated arguments.

Why do some defend keeping some coal in the system?

The reasons repeated are not nostalgic. First: in a global energy crisis, having domestic thermal capacity guarantees a minimum of stable electricity production. Second: it is a local resource that improves the trade balance against dependence on Algerian gas or imported uranium. Third, the most long-term: light oils are running out and coal would remain a raw material for chemical processes.

The other side responds with another bill. The cost of cleaning up Fukushima was estimated at $180 billion, and that money would be enough to sustain renewable supply for decades. And they recall that Vandellos I did not end in tragedy by a matter of luck, not design.

The subsidy battle: €5.5 billion versus €200 billion

The other front was renewable energy figures. Against the €5.5 billion accumulated by coal since 1990, green technologies were guaranteed a return of €200 billion over their useful life. The asymmetry, sustained with public money and a surcharge on bills, explains much of the irritation.

The reply is about timing: most of the premiums corresponded to old plants, with a remuneration scheme closed years earlier, and the price of emissions—five euros per tonne of CO2—did not compensate for the environmental damage of coal.

The closure of the mines and the bill that came later

Time settled the dispute through facts. Spain said goodbye to coal with the closure of all mines, and the successive increases in the electricity bill came one after another. The security of supply that was invoked ceased to be a hypothesis: dependence on Algerian gas forced the use of Russian gas when Algeria turned off the tap.

Those who warned of the consequences now vindicate their diagnosis. The most catastrophic predictions, blackouts, did not come true. Price rises did. And the remaining coal fleet closed down without anyone asking for the calculation again.

The question that remains open

The report estimated an extra cost of €350 million a year from doing without domestic coal. No one has made public, however, the reverse calculation: how much of the increase in electricity prices since then corresponds to that 3.52% that no one wanted to look in the face. Or is it that no one is interested in knowing anymore?