This moment could not be more appropriate, in the midst of debate about the future of green sources and batteries after the recent collapse in electricity prices in many European markets. Director General of the International Renewable Energy Agency (IRENA), Francisco La Camera (70 years old) receives EL PAÍS in Madrid, after a conference organized by the IESE Business School and the Naturgy Foundation.
The Italian academic and diplomat believes that the marginal system – discussed during the energy crisis, in which the market price is entirely determined by the technology that is most expensive at any given time – is not enough: “Long-term contracts are the ideal solution.” “It can guarantee stability.” It calls on governments to play a “more decisive” role to accelerate the pace of energy transformation.
I ask. His warning is clear: “We are very close to failing to achieve the goal of limiting global warming to no more than 1.5 degrees Celsius.”
Answer. We said a few years ago how the windows to achieve this goal were closing, and now what we see is that unless there is a major disruption, it will not be possible. The potential is there: last year, 87% of new installed capacity (electricity generation) was renewable and only 13% from oil and gas. In any case, it is less than half of what we need. The danger exists and the challenge is enormous: it is still possible, although increasingly difficult.
s. It feels like a final call.
R. This is the situation.
s. The new slogan is to triple the renewable energy installed worldwide. Is this possible?
R. China is doubling, Europe and the United States continue to grow, but not so fast. It is very uneven growth: Africa still accounts for a very small proportion of development (green energy), and this is unacceptable from an ethical point of view. not fair. We are talking about a continent where consumption, along with Southeast Asia, will see the greatest growth in the coming years. If we do not object to this request, it will be completely impossible to comply with the Paris Agreement. Change has to happen faster.
s. The key then lies in the emerging world.
R. Yes, the first problem is infrastructure: if this infrastructure is not available, it will not be possible to create the necessary market for renewable energy sources. The second is financial: a huge amount of money is needed, but we are convinced that if there is a clear plan and clear participation on the part of international financial institutions, the money will arrive. There are about $50 trillion in (financial) assets worldwide; It will only be necessary for a small portion to go to this area.
s. Interest rate increases are against us.
R. It’s like a dog chasing its tail: if financing costs are so high, especially in developing countries, it is because there is no market for buying and selling electricity. What we believe is that betting on infrastructure is the best way to promote the development of that market.
s. In recent weeks, electricity prices have fallen in Spain and other European countries, with many hours reaching zero and even negative values. Are you concerned about this situation?
R. This is a cause for concern: for people to invest, there must be a return. Much has been accomplished, but we still need to design a more suitable market for renewable energy. We can’t set price the way we do now. We need long-term contracts that provide stability and ease the current stagnation.
s. Should we change the pricing system then?
R. Marginal cost is not the appropriate way to price renewables. That is why for years we have been insisting on long-term contracts, which can guarantee stability. Moreover, auctions should not only be based on price, but on other aspects as well.
s. Batteries are set to play a crucial role in the electricity sector in the future. As well as reducing the price gap between the most expensive and cheapest watches.
R. Storage in general, not just batteries. Storage costs are falling and there is a lot of innovation going on. But, again, the market should not decide everything: we need good planning. If we want to have a balanced system, we need a plan. Let the private sector receive the benefits, but within the framework of a clear plan. I think this is the only way to speed up our path.
s. When will we see the widespread emergence of batteries?
R. There is movement. I don’t know if this is as much as we need, but there is movement. But, again, the role of government is very important. The move from a centralized system to a decentralized system brings with it many opportunities: more flexibility, more security… but at the same time, more ability to control complexity is needed. That is why we strongly insist that governments must play a decisive role in accelerating the transformation process. There is no doubt where we are going, that we are entering a new energy system dominated by renewable electricity and hydrogen. The market is taking us there too, but with the question of whether we will get there in time: climate change is forcing us to move much faster. This is the fundamental problem, and that is why the role of governments is crucial.
s. For many years, grids have been the elephant in the energy transition room. Are Spain and Europe ready in this field?
R. They are not ready. I prefer not to comment on specific countries, so I urge you to use my words in general terms. Progress has been made across the continent, but we must continue to adapt the system. It’s something we should have done ten years ago.
s. Mutual links between the Iberian Peninsula and the rest of the continent remain very weak.
R. Yes, I hope that the differences (between countries) can be overcome.
s. After the most severe phase of the energy crisis, demand for electricity remains weak. because?
R. I think energy efficiency plays a role in this. Naturally, the energy crisis is not over yet: the world still exists. Europe has made a tremendous effort to become less self-reliant, but it still has a long way to go. From a demand point of view, the most important thing is that it be directed towards green electricity. Electrify where possible, and if not, use renewable hydrogen or biofuels. The reality is that we still do not have enough demand: we need to increase it so that more can be invested, for example, in green hydrogen. It is ahead of the calendar by five or ten years.
s. Social opposition to renewable energy projects has increased significantly in recent years. are you worried?
R. Yes, we now have new community guides. This is important, because complaints, whether justified or not, eventually reach the courts. Now the European Commission has made clear that justice must take national interests into account. This makes a difference: those who oppose will choose dialogue more because it will not be easy for them to win in court. We cannot stop the process of leaving dirty energy behind because of concerns about the landscape.
s. There are those who talk about a hydrogen “bubble”. do you agree?
R. It won’t happen. Again, the market will sort this out in a few years, no doubt. But governments can solve these problems sooner. Policies are needed to increase demand for green hydrogen and reduce demand for fossil fuels.
s. Nuclear power developers are confident that small reactors, known as SMRs, will bring this energy source back to life. Are there reasons for this optimism?
R. I don’t think there is anything logical to support this idea. Reducing emissions by 43% between now and 2030 is imperative. We can’t do it in the future: we have to do it now. (SMRs) are not in business today: this is something we all know. We can talk about the (nuclear) “renaissance” over and over again, but I don’t think the Finns are very happy that their newest nuclear power plant cost three times what was budgeted, and that its construction took 12 years longer than expected. This is in an effective country like Finland.
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