Enric Brazís: "Electrical infrastructure must be developed to make the industry viable."

Enric Brazís Caubet (Palma, 1969), an industrial engineer with a specialization in ESADE, is the director of Endesa in Catalonia, the region's leading electricity company in both generation and distribution and marketing. The distribution network, specifically, is in the spotlight, both due to the massive blackout on April 28th and user complaints about access.

The capacity maps were published a month ago. The average in Spain was 83% saturation. I don't know how we are in Catalonia, in terms of capacity.

— Well, we were somewhat better than the Spanish average. We've had a decade of significant growth in renewable generation in Spain. This has allowed us to decarbonize a large part of electricity production and lower prices. And what we have now is the result of that success. In recent years, we've seen dramatic growth in demand for grid access and connection, both in Catalonia and in Spain. And that demand continues. In other words, there's a lot of industry, of all kinds, that wants to set up in Catalonia. From the moment the available capacity was published, we've had requests to take advantage of it.

Could this become a bottleneck for the industry, for the economy?

— This is already affecting many projects, because, obviously, without capacity, we can't provide access and connection, and many projects are affected. The solution lies in developing new electrical infrastructure. This isn't a No in the projects, but what we must do is work with clients, with the administration, with Red Eléctrica, with the regulator, to build new electrical infrastructure and make these projects viable, which is what we are doing.

Infrastructure is a regulated business, with investment rewards for companies involved in it, which have always been described as unattractive. Is this holding back the development of the network?

— A year ago, we presented the strategic plan and announced a 45% increase in investment in Catalonia. But we already stated that this was contingent on the regulation and remuneration of distribution activity improving on what we had. We are now in the phase of a circular proposal for a new remuneration model for the network. And if this model doesn't improve, we really won't have sufficient incentives to make certain investments.

If this remuneration were higher, would it also be possible to attract international funds or investors, as in other neighboring countries?

— The problem is that the rate currently on the table is at the bottom of the list in Europe. In Spain and Portugal, we have a rate that, obviously, isn't attractive to any investor.

Is it not attractive for current distributors?

— We must make a series of investments, which we are obligated to make and which we will do at all costs. We are willing to invest far beyond what we are required to invest to attract industry. Now, we need a model with a remuneration that incentivizes this investment and provides security. Because the problem with the model is that, basically, the incentive is tied to the capacity that customers subsequently contract, which is a factor that does not depend on us and therefore generates a lot of uncertainty. So, the model and the rate currently on the table incentivize you to replace all the facilities you have, let's say, that are more obsolete or that you must maintain and update, but there is no incentive for new infrastructure.

There are two recurring problems with the grid: On the demand side, grid saturation, and on the generator side, the inability to connect to the grid to deliver the electricity they generate. Is this an impediment to electrification?

— Node capacity primarily affects projects and access requests that require direct connection to a substation. For lower power levels, which don't require a line directly to a substation, there are many areas where we are providing supply and connecting. It's not that the economy is paralyzed, far from it. But lately, the volumes of power being requested are sometimes very high. Twenty megawatts seems to be a normal request, when before it was an absolutely extraordinary request. And the industrial sector works with lower power levels.

If we move towards greater electrification of the economy, will more and more power be needed?

— These very high capacities are being associated with an industry we didn't have before: data centers and storage systems. It's true that the rest of industrial activity is being electrified, but it's not demanding these volumes.

But replacing gas or oil with electricity increases demand.

— In Catalonia, the annual requests we've had for access and connection since 2020 have skyrocketed. Obviously, 2020 was an abnormal year [due to COVID], but we were talking about 1,900 megawatts; in 2022, 5,000; in 2023, 11,000; in 2024, we reached 19,000, and so far this year, we've received requests for 25,000 megawatts. Catalonia's installed generation capacity is 12,000, and peak demand is 7,000, meaning the connection volume is doubling the available capacity and practically quadrupling the peak. Of these 25,000, about 13,000 relate to these new uses, such as data centers and storage, and the rest, about 9,000 or 10,000, would go to traditional industry.

There are clear examples. The port is being electrified. The airport has now announced it wants to be electrified. Ultimately, all of this means increased demand on an already overcrowded network.

— Ultimately, the grid is saturated. If we look at the saturation of the Catalan grid, I think it was around 70 or 75%, driven by the transmission grid. The element that's limiting us is the transmission grid [which depends on Red Eléctrica].

Therefore, we would need the electricity grid to have more transmission networks with very high voltage.

— Exactly. And the rest can be our own business. A large part of the investment needed to increase the capacity of Catalonia's grid depends on Red Eléctrica.

Catalonia has a generation deficit, and will become even more so once the nuclear plants are shut down. So, will these transmission lines become even more necessary?

— In Catalonia, we have a mix that is truly very different from the rest of Spain. Last year, 56.7% of the capacity produced was nuclear. We are currently dependent on nuclear production, and it's hard to imagine that without growth in renewable generation—which must occur in Catalonia, where we are significantly behind the rest of Spain—we can afford to close nuclear power plants. Either we grow in renewables, which is what I believe we must do, or we will need transmission infrastructure that connects with France or Aragon.

But it is becoming increasingly complicated due to the opposition that exists in the territory.

— It is a decision we must make as a country.

Will electric car chargers add another problem to this saturated grid?

— Although we're talking about ultra-fast charging points, the capacity isn't that great and is distributed throughout the country. We may occasionally find some locations that are saturated, but I believe the charging infrastructure will add additional consumption and demand, but in a much more distributed way. The problem with installing charging points isn't the network, but rather the processing of permits to get them up and running. The bureaucracy. The licenses...

There are many complaints about the length of time it takes from requesting access to the grid to actually obtaining all the permits. Is the problem attributable to the distributor or to administrative bureaucracy?

— For a standard medium-voltage line that needs to be built new, the average time to put it into service right now is around seven years. Of that time, the construction of the line takes one year. And the remaining six years are spent on permits and authorizations. We are working with the Generalitat (Catalan Government) to streamline this process. It's very complicated to build new lines because there's a rejection of electrical infrastructure, both wind turbines and photovoltaic installations, in the region. This is truly one of the issues I believe we must address as a country.

Is a national agreement necessary to develop this electrification?

— There are two things here. In terms of generation, the installation of new renewable energy plants should be made easier from now on, and regarding permits, we are working to find solutions with the government to see if we can shorten all these deadlines.

As a company, have you encountered many problems with the development of renewable energy parks?

— It's true that in some areas there is strong territorial opposition, and appeals and disputes are filed, and that obviously delays the entire process, but in other areas the relationship with the territory may be more friendly.

Is it a good idea to allow the territory to participate in the capital of renewable projects?

— I think all the ideas are good; the reality, however, is that you see that there isn't a great demand, there isn't a great response.

And could this be an opportunity for other types of investors outside the territory?

— In Catalonia, we have a limitation: a change in project ownership cannot be made until the facility is operational. This was done to prevent speculation, but I believe it's also a limiting factor because, in certain projects, new investors could give them more life.

Self-consumption has grown significantly in recent years. Now it's slowing down. What's happening?

— We've had a success story in Spain with renewables. All this growth in new renewable generation has not been accompanied by growth in demand so far. Quite the opposite. We've had a decrease in demand. A decrease in demand that has to do with self-consumption, on the one hand, and with greater energy efficiency, on the other. If this growth in new renewable generation is not accompanied by growth in demand, what we have is a price problem. There was very significant growth during the Ukraine crisis, with rising prices, and everyone saw self-consumption as a huge opportunity to lower their costs. Now, prices have dropped, with periods of the year and time slots with negative prices. I think that as soon as demand picks up, we'll see a rise in interest in photovoltaics again. Our forecast, given the demand for access and connection, is that demand will begin to grow significantly in the coming years.

And will the distribution network be able to cope with this increase in demand?

— This is the key point. Right now, the electricity grid is ultimately the backbone of the system. It's the heart of the energy transition. We must grow the grid. The PNIEC projected an investment of €50 billion by 2030, which means tripling the current investment rate. A model must be put on the table that's good enough for everyone and incentivizes investment, and investment will come.

We've experienced the largest blackout ever recorded in Europe. Did the distribution grid or the transmission grid fail?

— Last week, we received the first report from the European network of operators. The fact is that it was truly a situation never before experienced, and right now, it's difficult to fully understand the entire mechanism. The fact is that on April 28th and earlier, there were voltage variations in the transmission grid. And we have reports from Comillas University, also endorsed by international companies, indicating that there was a lack of synchronous generation, or the scheduled synchronous generation was insufficient.

And the only way to regulate it is with nuclear, combined cycle, and hydroelectric power?

— The energy transition is a process that began a few years ago and must be completed by 2050. We will need to develop new technology to guarantee the supply and operation of the system exclusively with renewable energy. Until we have all this new technology, which basically involves control electronics and storage systems, tested and operational, what we have is traditional synchronous generation that provides stability to the electrical system, including nuclear, combined cycle, and hydroelectric power.

I suppose it was easier to control all this before when there were just a few generators and a unidirectional grid, and now it's necessary to adapt this grid to bidirectionality and the entry of much more generation with very different powers.

— You need a very flexible network because it must change its way of operating in certain locations several times a day. And that requires digitalization, automation, and we've been investing in that for years. And we must continue investing because the challenge is ever greater.