ASPAPEL asks Spain's MITERD agency for remuneration treatment for currently excluded cogeneration plants so adjustment mechanism covers real cost of gas; 48% or 420 MW of paper cogeneration plants have recently been idled due to cost of gas they support

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July 15, 2022 (press release) –

ASPAPEL REQUESTS THE MITERD A RETRIBUTIVE TREATMENT FOR COGENERATION THAT RECOGNIZES THE CURRENT COST OF GAS

The paper industry offers to contribute to the Contingency Plan by operating its 876 MW of high-efficiency cogeneration (2% of national electricity)

The cogeneration plants of the paper industry consume 30% less gas than combined cycles, a saving of 400 million. €/year in the national energy bill

  • 48% (420 MW) of paper cogeneration plants have come to a standstill in recent days due to the cost of gas they support. A critical situation, unparalleled in the rest of Europe.
  • A regulatory error leaves out the compensation mechanism of the Iberian exception to industrial cogeneration plants that have a remuneration regime.
  • In June, a combined cycle power plant had a recognized gas price of €112/MWh compared to €50/MWh for a cogeneration plant.
  • ASPAPEL requests the Portuguese solution ( possibility of temporarily renouncing the cogeneration facilities to the remuneration regime , allowing them to take advantage of the adjustment) or complement the cogeneration remuneration so that the real cost of gas is covered by the adjustment mechanism.

The paper industry offers the Government to contribute to the Contingency Plan by operating its 876 MW of installed power in high-efficiency cogeneration (2% of national electricity), which consumes 30% less gas than combined cycles, which would mean savings 400 million euros a year in the national energy bill. For this to be possible, ASPAPEL asks the MITERD for a remunerative treatment for cogeneration that recognizes the current cost of gas and does not force cogeneration to operate at a loss and stop production.  

As an example, last June a combined cycle power plant had a recognized gas price of €112/MWh compared to €50/MWh for a cogeneration plant in the industry. This is due to a regulatory error that excludes industrial cogeneration plants that have a remuneration regime from the compensation mechanism of the Iberian exception.

As a result, some 420 MW, which represent 48% of the total cogeneration park installed in the paper sector, have been shut down in recent days due to the cost of the gas they support. This is a critical situation, unparalleled in other European countries, with Spanish cogeneration plants stopping to avoid incurring losses or forced to continue operating at a loss when the factory has no alternative source of heat supply.

The Iberian exception excludes cogeneration plants that have a remuneration regime and to this is added that the update of the remuneration for cogeneration for the second half of 2020, all of 2021 and so far in 2022 is still pending approval, an update that, in addition, it does not take into account the true situation of the gas markets.

It is urgent to put an end to this discrimination, with a remuneration for cogeneration that covers the current cost of gas.
 
Either the Portuguese solution or complement the remuneration by recognizing the real cost of the gas
One possible solution would be to enable the possibility of temporary waiver of the cogeneration facilities from the remuneration regime, allowing those cogeneration facilities that so choose to take advantage of the adjustment, as is the case in Portugal. Or complement the cogeneration remuneration so that the real cost of gas is covered by the adjustment mechanism.
  
The European plan protects homes, essential users and essential industry such as the paper mill
The Spanish Contingency Plan is developed within the framework of the European Gas Demand Reduction Plan, which is being drawn up by the European Commission to deal with all possible scenarios for next winter. It is a plan intended not only to protect households and essential users such as hospitals, but also industries that are critical to EU supply chains, competitiveness and the supply of products and services essential to the economy, such as manufactured by the paper industry.  

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ASPAPEL Press Office (Spanish Association of Pulp, Paper and Cardboard Manufacturers):
Information and Image | Paseo de la Castellana, 140 | Tel: 915616826
Angeles Alvarez | Email: aalvarez@informacioneimagen.es 609904877
Eva de Santos | Email: evadesantos@informacioneimagen.es
www.aspapel.es
 

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