Spain limits gas price for power generation

Spain limits gas price for power generation

Minister Ribera says the measure will reduce wholesale electricity prices by nearly 40%.

The Spanish government has decided to limit the price of gas used to generate electricity. The Minister of Ecological Transition, Teresa Ribera, said Friday in Madrid that this measure will lead to a drop in the average price of electricity by almost 40 percent in the wholesale electricity market.

During the energy crisis triggered by the war in Ukraine, the European Union allowed Spain and Portugal to intervene in the electricity market for twelve months.

The reduction will benefit all of Spain’s consumers, families, businesses and industry, Ribera said. “But those who use the regulated tariff will notice immediately.” The reason: In Spain, the regulated tariff is linked to electricity exchanges. The roughly 40 percent of households with such a rate immediately feel every change in price.

Limited for six months, then gradually increased

In a cabinet meeting, the left-wing government of Prime Minister Pedro Sánchez decided to limit the price of gas to 40 euros per megawatt hour, which would be valid for six months, as explained by Ribera. After that, the maximum price must be increased gradually. On average, a price of 48 euros per megawatt hour is targeted for the entire twelve-month period.

As a result, the price of electricity on the wholesale market will drop to around €130 per megawatt-hour. This means that the average price recorded in Spain in the first quarter of 210 euros will be reduced by almost 40 percent. Such a measure, which will come into force after publication in the Official Gazette no later than Saturday or Monday, has probably never existed in Spain, underlined the minister.