Can we build them from scratch? Viability of municipal retail companies in Spain

Abstract

[EN] Over the last years, municipalities have increased their awareness around energy by paying more attention to consumption, origin and cost. Some municipalities started to procure electricity in wholesale markets to eliminate intermediary costs. Others had more ambitious plans and have created municipal electricity retail companies not to only purchase electricity for municipal loads but also to offer this service to residential consumers. In this work we propose a methodology to evaluate the viability of setting up a municipal electricity retail company to purchase electricity for the municipal loads as a prior step to provide service to households. The methodology is applied to the city of Valencia (Spain), where a legal, economic and barriers analysis show potential benefits but also a set of risks. We used a year data of consumption, electricity prices and contracts to compare two scenarios, with and without municipal retail company, to assess the viability of the company. The methodology considersthe costs associated with software, human resources and possible energy imbalances to assess the viability of the solution. The application of the methodology results in potential benefits but also important risks that must be taken into account by policy makers prior to the start of a project of this kind.