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ENERGY

New gas pipeline linking Spain and France may take ‘seven years’ to build

A planned underwater energy pipeline linking Barcelona in Spain and Marseille in France could take up to seven years to build, Spain's energy minister said on Friday.

New gas pipeline linking Spain and France may take 'seven years' to build
File picture of Portugal's Prime Minister Antonio Costa (L), Spain's Prime Minister Pedro Sanchez (C) and French President Emmanuel Macron (R). Photo by EMMANUEL DUNAND / AFP

France, Spain and Portugal announced on Thursday they had agreed to build the maritime pipeline instead of a long discussed overland pipeline across the Pyrenees that France opposed, but gave no timeline for its construction.

The underwater pipeline — dubbed BarMar — would initially be used for natural gas but, over time, more and more for hydrogen.

“This new design logically takes longer. We have to study whether it is five or six years, seven years,” Spain’s Energy Minister Teresa Ribera said during an interview with Catalunya Radio.

“Now is probably the most complicated part, which is to work with the technical teams of the various countries, of the different firms that have the capacity to design a project of these characteristics.”

Ribera said the three nations expect to get European Union funding for the project, which will allow the energy networks of Spain and Portugal to be connected to those in central Europe.

The announcement of the pipeline comes as Europe is racing to secure alternative energy supplies after Moscow slashed gas flows apparently in response to Western sanctions over Russia’s invasion of Ukraine.

Spain and Portugal had lobbied hard for the construction of a 190-kilometre (120-mile) overland pipeline across the Pyrenees to France, which would allow the shipment of gas further on into Germany.

Initially launched in 2003, the MidCat project was dropped in 2019 over regulatory and funding issues. But in the wake of Europe’s energy crisis sparked by the Ukraine war, Spain and Portugal revived talk of the project, which had the backing of Germany.

Its aim was to transport gas from Algeria through Spain to the rest of the European Union. There are currently only two small gas pipelines linking Spain and France.

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ENERGY

French electricity bills set to decrease from February 2025

France's energy commission has announced it will delay the revaluation of electricity prices until February 2025, when it expects the cost of electricity to decrease.

French electricity bills set to decrease from February 2025

The French energy regulatory commission (commission de régulation de l’énergie, CRE) had planned to re-evaluate electricity prices for the regulated (flat-rate) tariff plan in August 2024, but this has been postponed to February 2025, according to French daily SudOuest.

The revaluation in February will take into consideration the rise of transmission costs, as well as a predicted decrease in electricity prices, CRE announced on Wednesday.

As a result, the higher transmission costs are expected to be offset by decreased electricity prices, leading what CRE predicts will be a 10 percent total decrease in bills for those on the regulated electricity tariff plan.

What does this mean for household bills?

This change will affect people who are on the ‘regulated rate’ plan, also called the tarif bleu. According to SudOuest, there are 22.4 million of these contracts, including both households and small businesses.

According to Ouest France, this means that for the average French household – who sees annual electricity bills of €2,000 – they would save at least €200.

There are other types of electricity contracts in France who are not included in this change – for example, the peak hours contract, which differs from the flat-rate because it offers a lower price per kilowatt during off-peak hours, and a more expensive one during peak hours.

The 17.5 million contracts (which include households and businesses) that are not on the regulated tariff plan will see an increase in transmission prices from November 1st.

Why the delay?

The revaluation was initially planned for August, but it was pushed back to February at the behest of the French government, SudOuest reported.

The French government, who was at the time concerned with an ongoing political crisis after snap parliamentary elections, was reportedly concerned that swinging prices would be confusing for consumers.

In 2021-2022, amid inflation, post-Covid recovery and the war in Ukraine, electricity prices soared by more than 43 percent, despite a price shield the government put into place.

Therefore, the French government asked that CRE make a decision that “takes into account their recommendations for stability”.

CRE thus decided that they would put the annual transmission update into force on November 1st, but “in the interest of price stability and clarity” they promised to postpone the increase for households and very small businesses on regulated tarif plans until February, when the fall in electricity prices is expected to occur.

How is the electricity price calculated?

In France, in addition to the type of plan you have, the final price of electricity depends on three components – transmission costs (or the tarif réseau), the price of the electricity itself (which includes marketing costs, the supplier margin and energy supply costs), and the tax applied.

As for the February revaluation, it is the tarif réseau component that will increase by one percent from February 1st, but the CRE believes this will be absorbed in an overall decline in the price of electricity, leading to 10 percent drop in flat-rate bills.

The price of electricity still remains higher than pre-2021, when the cost was between €40-50 per megawatt hour (MWh).

Prices are currently stabilising around €60-70 per MWh, which is far lower than peaks seen in 2022.

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