Spain seeks EU cash to link up its 'energy island'

Spain will lobby its neighbours at a summit in Brussels starting on Monday to split the cost of new power lines across the Pyrenees, to boost Europe’s fuel supplies from what officials have called the “energy island” of the Iberian Peninsula.

With Europe searching for alternatives to Russian fossil fuels, Spanish Prime Minister Pedro Sanchez sees an opportunity to sell his country’s substantial supplies of renewable energy and liquefied natural gas.

Spain is the European Union’s biggest LNG importer thanks to deliveries from North Africa, while Portugal is one of its leading generators of renewable energy because of its wind and hydroelectric markets. Spain also has a large share of renewables in its energy mix.

But the 623-kilometre bottleneck that links those two countries to France and the rest of mainland Europe is light on energy interconnectors, after regulators blocked a gas pipeline between Catalonia and the south of France in 2019.

EU leaders agreed at their summit in March that Spain and Portugal could expect special treatment in energy matters because of this isolation, allowing them to set price caps to ease cost-of-living problems.

Mr Sanchez said that Spain has a “chance to provide an answer” by exporting electricity, gas and eventually hydrogen, regarded by the EU as one of the fuel sources of the future.

The EU has signalled interest in establishing more connections, but Mr Sanchez said before a European Council summit beginning on Monday that Brussels should put up some of the money.

“Interconnections are a priority in the European context, but we need a real political and financial commitment from the EU,” he said after talks with Portuguese Prime Minister Antonio Costa to prepare for the summit.

Mr Costa was expected to stand in for Spain at the start of the two-day summit, while Mr Sanchez attends a commemorative event at home with King Felipe VI.

Part of the talks in Brussels will be dedicated to an energy transition given momentum by Russia’s invasion of Ukraine, which led to a push from European leaders to take Russian fossil fuels out of their supply mix.

The EU said it has committed €578 million ($622m) to an underwater electricity cable across the Bay of Biscay from Spain to France, which is scheduled to go online in 2025.

Projects still in need of approval include a high-voltage connection between Cantegrit in France and Pamplona in Spain, crossing the western Pyrenees.

Regulators in Spain and France are also examining the possibility of a gas pipeline on the eastern side of the border, having rejected the idea three years ago.

At the time, they ruled jointly that there was no shortage of space on existing interconnections, that the cost of the project was too high and that the future of gas in the region was uncertain.

The EU plans to be carbon-neutral by 2050 but regards natural gas as a necessary transition fuel while it phases out coal and increases power generation from renewables.