A first step towards energy sovereignty

Plaques solars als terrats de Barcelona © Ajuntament de Barcelona / Equip d’audiovisuals

The public company Barcelona Energia is gaining momentum in the new map of alternative operators with support, competitive rates and energy awareness, although it is still far from realising its potential. In addition, the big companies in the sector have also taken a turn and are making great strides in the field of renewable energies.

Things are happening in the energy world. And more are yet to come. Choosing the sun, wind and other clean energy sources instead of coal, oil or gas implies technological changes that make a decentralised and more democratic model possible: every user can play an active role therein.

“Now you can have your own separate production and small distribution, and you can agree with other users to share the electricity you generate. The game rules are changing and new players are emerging”, sums up consultant David Serrano, director of Energia Local.

The transformation is not solely technological. We are coming from a world of subscribers disconnected from one another, with little room for complaint, in an oligopolistic market in which energy was scarce, and we are moving towards another world in which citizens are more aware of and sensitive to climate change, and are hyper-connected through social media, where malpractice has a ripple effect. “All this, within a framework of surplus accessible energy sources. Let us remember that, 30 years ago, the cost of solar panels was 85% higher”, Serrano puts it in context.

Against this new backdrop, all sorts of initiatives are growing, becoming more firmly established or emerging: energy consumption cooperatives, citizen recovery of renewable plants, collective purchases by consumer associations, local energy communities or the new demand managers, known as demand aggregators.

At the same time, more and more companies are proliferating that buy and sell electricity certified as “green” by the Spanish National Authority on Markets and Competition (CNMC). And among the providers gaining momentum in this context are local-level public operators, and Barcelona Energia is one of the biggest of them. This renewable energy company operates through the waste treatment and sorting company Tersa, whose establishment was approved in March 2017 by the plenary session of Barcelona City Council, with the favourable vote of all parties except the PP (People’s Party, Spanish conservative political party), which abstained. Its scope covers the 36 municipalities in the Barcelona Metropolitan Area (AMB).

Barcelona Energia was started up to guarantee the supply of markets, libraries, cemeteries, street lighting... all publicly-owned buildings. It is the first stop on the journey of public electricity companies, such as the one also designed in Palma [Majorca] or the one planned by Pamplona, stopped last summer. The municipalities of Saragossa and Córdoba are also looking into making the move. In the case of Cádiz, it enjoys the participation of Endesa.

A long way to go

Starting with supply for own consumption, there is a long way to go. In the case of Barcelona Energia, in 2019 it opened its service to the public. By law, public companies can carry out what is known as ‘management orders’ with a business cap of 20% in the private sector. This percentage includes any order that does not come from its shareholders, in this case Barcelona City Council and AMB.

According to this restriction, Barcelona Energia could establish roughly 20,000 contracts, but it currently only has 3,000. This figure is still far from its potential and that has provided ammunition to municipal opposition groups. They are accused of having blown expectations out of proportion and of demagoguery by talking about energy sovereignty.

Torres d’alta tensió © Ajuntament de Barcelona / Vicente Zambrano High voltage towers © Barcelona City Council / Vicente Zambrano

It was not the only company that witnessed an increase. “Every time news related to the electricity sector emerges that outrages the user, people move. We didn’t know what would happen with the pandemic, but just between late December and January we registered almost 3,000 contracts,” maintains Eduard Quintana, partner and spokesperson for electricity markets at the non-profit cooperative Som Energia. This company, set up just a decade ago and serving the whole of Spain, has experienced a growth that he defines as “linear”, up to the current 124,000 customers it manages. Som Energia is one of the 19 cooperatives of the Unión Renovables [Renewables Union], which includes La Corriente, in Madrid, to GoiEner, which operates preferably in the Basque Country and Navarre.

It must be said that we are talking about very small players that barely tickle the large energy groups, which are the ones that continue to set the pace in the market. According to data from the CNMC, in Spain there are 29.6 million active supply contracts, of which 18.6 million have been placed on the free market (outside the regulated rate). They represent 63% of the total. But of these 18.6 million, 83.6% is taken over by the big five (Endesa, Iberdrola, Naturgy, EDP and Viesgo / Repsol). Without forgetting that three years ago they retained a share of 89.5%. In the case of the gas market, the big five’s control corresponds to 95.4%.

Savings in CO2 and money

Moreover, Barcelona Energia emphasises that, beyond growing, it has other social and environmental objectives. “In two and a half years, after the change of contract with Endesa, we have achieved a saving of 1.3 million euros and more than 100,000 tonnes of CO2 emissions, and that is equivalent to driving 14,000 times around the planet in a diesel car “, Gallart emphasises.

The Barcelona public company is proud of the competitive rates that it can propose – it estimates that it can obtain savings of between 20% and 30% on the 650 euros per year paid on average by a household – because it claims its overarching goal is to “escort citizens in the metropolitan area towards the energy transition with personalised advice”, not to earn money. “Nor to lose it”, specifies its director. In 2019, Barcelona Energia recorded 1.5 million euros in profits. The 2020 results have not been closed, but the operator states that they will also be positive, and will be reinvested.

For those seeking advice, a study of their electricity bills is performed to optimise the power according to their needs and, after three months, their electricity consumption profile is analysed and they are advised as to the most appropriate rate. If they have panels on the roof, the solar rate; if they want more stability, the fixed rate; if they are looking for a more competitive rate and are willing to risk market fluctuations, the variable rate; if they want a hybrid between fixed and variable, the efficient rate, which encourages energy saving. They do not offer a flat rate because they believe this option does not foster lower consumption. Consumer organisations often complain about flat rates because they end up being more expensive.

The investment in advertising, budgeted at 250,000 euros, has not gone unnoticed either in the sector or among municipal government opposition groups, and all the more taking the result into account. When asked about it, Gallart justifies it. “In light of the degree of user satisfaction and the energy savings achieved, we considered that we should report the benefits more, in favour of a new campaign for 100% renewable, 100% honest energy. If we offer an economic and environmental good for citizens, we will continue in this vein.”

What sense does it make that, in a liberalisation framework, municipal councils enter into competition? “From the social economy, what they can be reproached for is that they seek a space that is already occupied by institutions such as cooperatives, which operate with democratic values,” states Mario Sánchez-Herrero, director of Ecooo, a non-profit company that works towards another ecological transition and that it is presented as “the Robin Hood of energy”. Ecooo acquires plants that were entitled to high premiums and that attracted many investors with huge capital without particular environmental awareness, in order to socialise them among people with environmental sensibilities. It sells shares from 100 euros, with a return of 4.5%. In total, it has already socialised or purchased 150 plants throughout Spain. The company has an agreement to transfer the production of its plants, certified by the CNMC, to other cooperatives – mainly Som Energia .

However, Sánchez-Herrero does find other uses for municipal public operators: recruiting experts in the sector to help town councils save by learning to buy cheaper green energy, promoting self-consumption – both in public buildings and shared self-consumption with the closest neighbourhood community – and fostering social public policies given the problems of the most vulnerable households.

In this regard, Barcelona Energia wants to become a 360-degree operator, that is, to offer the full range of energy services. Supplying renewable energy to individuals and companies, managing surpluses (selling them to the grid) and, this year, beginning to offer a new “turnkey” project service for the installation, maintenance and operation of photovoltaic panels. It is also considering participating in a local energy community and acting as a demand aggregator [see the complementary article “Consumption, self-consumption and non-consumption of energy”].

The limit of the social tariff

“It is very good that there are electricity companies that do not follow the market logic, because electricity is an essential service for a decent life. But it must be recognised that the group of alternative groups to the large ones does not involve more than 200,000 contracts. And for households that have difficulties, municipal operators are not necessarily the most interesting option,” believes Sergio Tirado, from the Association of Environmental Sciences (ACA), which has been putting together reports on energy poverty in Spain. He affirms this, despite the fact that public operators may have greater awareness to avoid supply cuts. He refers to the fact that, as they are not leading providers, they cannot offer the social tariff, which implies discounts of between 25% and 40%, depending on the case and it is the main tool whereby the problem is now tackled.

Barcelona Energia stresses that part of its work entails identifying homes with difficulties, consulting the municipality’s social services and guiding customers who call with an energy poverty problem. As the income thresholds to be entitled to the social tariff, regulated by the State, are very low (11,279 euros per family unit without children), as condemned by the Alliance Against Energy Poverty, the public operator endeavours to guarantee the supply to households located in the bracket of consumers who are between the vulnerability threshold established by the social tariff and the one marked by Catalan Law 24/2015 on the housing emergency and energy poverty.

Eduard Quintana highlights the relevance of these public operators: “It is important that there are actors that offset the power of large groups that dominate the market, just as cooperatives do”. Som Energia’s electricity markets spokesperson considers “for his part” that “we must ensure that these operators do not end up becoming macro-companies where positions of responsibility are assigned to figures who are there to make their retirement easier and not so much on their own merits”. The cooperative has also promoted energy-generating initiatives through different avenues, although the proportion of what it produces compared to what it sells does not reach 7%.

Barcelona Energia has set up a consultative citizen council to involve customers in the running of the business, in what appears to be an attempt to resemble cooperative assemblies. Participation is a challenge that cooperatives themselves face as they grow.

All of this is a first step towards energy sovereignty.

Placa fotovoltaica del Fòrum © Ajuntament de Barcelona / AL PHT Air Picture TAVISA Photovoltaic panel at the Fòrum © Barcelona City Council / AL PHT Air Picture TAVISA

Consumption, self-consumption and no energy consumption

The energy transition implies major changes in the generation of electricity, but also in the consumption thereof. Changes in production are often talked about, but not so much changes in demand. And yet, they are equally vital in the process of transforming the model that Barcelona Energia considers participating in.

It is known that electricity generators offer it to the market and are paid for it. But there is also the possibility of being paid a rebate for energy that is not consumed. For example, if a plant can reduce consumption (disconnect part of its load) during certain hours and offers the system this non-load, and it turns out that the system (in this case, Red Eléctrica) needs less power to be consumed in those hours – to guarantee the stability of the grid or to avoid overloads –, the system could then pay a rebate to the plant for this non-consumption.

As this ends up being a mess and it is difficult for citizens and companies to know how to go about it, the fundamental “aggregator” figure appears. An aggregator is a kind of representative that is in charge of gathering the demand of different consumers to offer the system their non-consumption: in a period of time it reports that a specific number of kilowatts can be disconnected. And, if necessary, the system pays a rebate; the aggregator charges a fee for this mediation or demand management. The providers are destined to occupy this place, because they already have the consumption data. But some may be independent.

Thus, the system can reward users in two ways: surplus production from self-consumption installations, which has not been used, and the one that halts consumption from the grid at times of high demand.

Energy communities

Another of the foreseen figures in the new regulation, in which the public operator Barcelona Energia is also considering action, are “energy communities”. They are groups of people, associations, SMEs, entities and/or authorities, who constitute a legal entity, brought together to execute collective management of the energy that they themselves produce, with sustainability and social purposes in mind. They are not created to generate financial business. Members who voluntarily participate cannot be more than 500 metres from the facility.

These communities have common ground with shared self-consumption, but they are designed for projects on a larger scale, such as a neighbourhood or a large industrial estate, than a simple community of owners that put together a common installation to save on bills, reduce CO2 emissions and separate part of the energy generated from possible price hikes.

Three ways

Barcelona Energia explains that it promotes self-consumption in three ways: the first, offering the solar tariff for those who have panels and consume their own electricity; the second, offering payment services for the excess kilowatts produced; and, the third, taking advantage of the experience that the management of photovoltaic panels has given to Barcelona City Council since 2009, such as the iconic Fòrum facility, to manage “turnkey” self-consumption projects for those who request them.

“We are facing a major transformation, and the regulation should allow the participation of whoever wishes, to prevent activity from continuing to be concentrated in the same hands. But we must not indulge in naivety either; the major transformation will be carried out by those with huge capital, which are the same ones that had it 20 years ago. Big companies, big investors, family offices...“, comments the energy expert David Serrano, with some scepticism, aware that the large companies in the sector have turned around and are making great strides in the field of renewables. From Energia Local, Serrano also warns that we are operating out of fashions and “crazes”. “It happened with cogeneration, with solar plants and now we are seeing it with hydrogen, a still fledgling energy but a promising alternative for storing surplus renewable energy and for heavy transport”.

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