The need for flexible energy regulations to boost economic growth during the energy transition
Regulations should be “a means, not an end”, said Josep Maria Salas, a member of Spain’s CNMC (market and competition board) during the talk entitled ‘Regulatory challenges of the energy transition in the electricity industry’, organized by the Esade Alumni Energy & Environment Club and Law Club, together with Esade Law School. Salas highlighted that the regulatory framework must constantly adapt to changes in the economy and society in order to drive sustainable, fair growth. “Anything that’s technically efficient will also be economically efficient,” he added, insisting on the need to balance the three cornerstones of the ‘energy trilemma’: robust supply, environmental sustainability and economic viability, in a crucial year like 2025, in which Spain will define its role on the global energy stage.
Connection to the grid and tariffs: key challenges in harnessing renewables
Equal access to the grid and efficient tariffs are both essential, core issues in order to ensure a fair, accessible green shift. Salas underlined the importance of digitalizing the energy system in order to optimize infrastructure usage, avoid idle lines – particularly as regards solar energy – and prevent energy wastage with the ensuing impact on energy take-up and job opportunities. With its unsaturated grid and high production of renewable energy, Spain is in the enviable position of being able to improve its competitive edge, but in order to improve access to the existing infrastructure, it is essential to balance supply and demand. He also stressed that when analyzing companies’ energy costs, it is important to take into account not only what they pay but also possible revenue streams they might generate by taking part, for example, in flexibility markets.
Liquidity, streamlining for consumers and modern governance
The CNMC board member proposed measures to improve the industry’s long-term liquidity, i.e. contracts for difference which safeguard both suppliers and consumers and avoid the overinvestment that negatively affects the latter. Salas stressed that the regulations must be clear and accessible to consumers, and that the latter must play a key part in energy decision-making. He pointed out that applying for public grants is often like a maze, and suggested a more humanistic process in which citizens play an important, active role.
On the subject of governance, the board member emphasized the need for more digitalized regulators and a move towards a common European vision that transcends state boundaries and responds to the challenges of the energy sector. Salas also mentioned the challenges of attracting talent to the regulator and ensuring adequate finance, which could be raised by operator charges. “We need a well-focused, autonomous regulator able to adapt to changes whilst maintaining institutional stability,” concluded Salas.
Towards dynamic regulation to boost investment and stability
Enric R. Bartlett, professor at Esade Law School and director of the Advanced Program in Energy and Electrical Sector Law, agreed that flexible regulations, which are interpreted taking into account the technological and economic developments that shape social reality at all times, are essential in order to attract investment and promote innovation in the energy sector. The CNMC board member, Josep Maria Salas, also stressed the importance of “dynamic regulations” that enable flexible adjustments without compromising the legal stability so essential to uphold investor confidence. Both experts agreed that robust governance and flexible regulations will be crucial for tackling the challenges of the energy transition in an ever-changing landscape.
