Two decades later, can the Iberian electricity market still stumble on its own success?
On October 1, 2004, while in Portugal users were faced with a new increase in public transport prices, driven by the rise in the cost of oil, in Santiago de Compostela, Spain, Iberian government leaders kicked off the a project that most energy actors today recognize as a success.
The Iberian electricity market (Mibel) would take another three years to get off the ground, but it would end up fulfilling a large part of its purpose, leading Portugal and Spain to function as a single market, with an equal wholesale price for the overwhelming majority of hours of the year. A market with more scale, greater energy flows between the two countries and greater capacity to absorb renewable electricity.
But if Mibel facilitated these developments, today it remains trapped in a energy island. France continues to resist expanding interconnections with Spain. And this means that the growing Iberian production of green electricity tends to be, at times, too high, driving the value of the megawatt hour (MWh) on the wholesale market to zero or negative prices and threatening the profitability of new projects, or even widening the price differences between Portugal and Spain, if no more electricity lines are built between the two countries.
