1st Oct 2022

Brussels approves Spanish-Portuguese state-aid price-cap

  • After an intense debate in March, EU leaders agreed to grant Spain and Portugal the chance to set their own electricity prices (Photo: European Union)
Listen to article

Spain and Portugal will be able to use €8.4bn in state aid to ease the burden of high energy prices on consumers living in the Iberian Peninsula.

The European Commission finally approved the so-called 'Iberian exception' on Wednesday (8 June), recognising that the Spanish and Portuguese economies are experiencing "a serious disturbance" due to an increase in energy prices following Russia's invasion of Ukraine.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

The state aid plan of €6.3bn for Spain and €2.1bn for Portugal is intended to reduce the production costs of electricity, directly financing part of the fuel cost of electricity operators, and, ultimately, the price in their domestic wholesale electricity markets.

In March, Spain and Portugal presented a proposal to the commission setting a maximum of €30-per-megawatt-hour for the price of gas.

But the commission agreed to set the price cap at an average of €48.8-per-megawatt-hour while the plan is in place, initially starting at €40-per-megawatt-hour for six months.

The measure will be running from 15 June until the end of May 2023, covering the period with the highest electricity consumption — autumn and winter.

The Iberian exception, which was agreed upon by EU leaders in their March summit responds to the limited interconnection capacity of the Iberian Peninsula with the rest of Europe — a factor which increases the exposure of consumers to price shocks.

Spanish prime minister Pedro Sánchez welcomed the commission's decision, saying that such a measure will immediately reduce electricity prices in households by up to 20 percent.

"[This decision] will also protect consumers against future price rises in coming months if the war in Ukraine goes on for longer or worsens," Sánchez said.

While the EU recognises the need for such temporary measures, the commission has also called on the Iberian countries to put forward reforms to make their energy systems more resilient.

The EU commissioner responsible for state aid rules, Margrethe Vestager, said the measure would also allow Spain and Portugal to reform their electricity systems in line with climate policies and "ultimately mitigate even further the effects of the energy crisis on final consumers."

Energy price spiral could harm EU recovery

Sky-high energy prices could undermine the EU's post-corona economic recovery, the EU Commission has warned, as EU states and MEPs called for joint action and fair play.

Spain wants energy price discussion at next EU summit

Spain wants to discuss the current energy price spike at the next EU summit in October, and called on the European Commission to provide member states with guidance on how to react to current record gas and electricity prices.

News in Brief

  1. EU ministers adopt measures to tackle soaring energy bills
  2. EU takes Malta to court over golden passports
  3. EU to ban Russian products worth €7bn a year more
  4. Denmark: CIA did not warn of Nord Stream attack
  5. Drone sightings in the North Sea 'occurred over months'
  6. Gazprom threatens to cut gas deliveries to Europe via Ukraine
  7. New compromise over EU energy emergency measures
  8. 15 states push for EU-wide gas price cap

Stakeholders' Highlights

  1. The European Association for Storage of EnergyRegister for the Energy Storage Global Conference, held in Brussels on 11-13 Oct.
  2. EFBWW – EFBH – FETBBA lot more needs to be done to better protect construction workers from asbestos
  3. European Committee of the RegionsThe 20th edition of EURegionsWeek is ready to take off. Save your spot in Brussels.
  4. UNESDA - Soft Drinks EuropeCall for EU action – SMEs in the beverage industry call for fairer access to recycled material
  5. Nordic Council of MinistersNordic prime ministers: “We will deepen co-operation on defence”
  6. EFBWW – EFBH – FETBBConstruction workers can check wages and working conditions in 36 countries

Latest News

  1. Putin declares holy war on Western 'satanism'
  2. Two elections and 'Macron's club' in focus Next WEEK
  3. EU agrees windfall energy firm tax — but split on gas-price cap
  4. Ukrainian chess prodigy: 'We are not going to resign ... anywhere'
  5. Going Down Under — EU needs to finish trade deal with Australia
  6. MEPs worry Russian disinfo weakens support for Ukraine
  7. Everything you need to know about the EU gas price cap plan
  8. Why northeast Italy traded in League for Brothers of Italy

Join EUobserver

Support quality EU news

Join us