Wednesday

6th Dec 2023

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.

EU public procurement reform 'ineffective', find auditors

The EU Commission reformed procurement directives to make bids more attractive (and competitive), but the reform has failed, say auditors. Procedures now take longer, and the number of direct awards and individual tenders has increased over the past decade.

Analysis

What are the big money debates at COP28 UN climate summit?

The most critical UN climate conference (COP28) ever will run from Thursday to mid-December — with talks on climate commitments and climate finance expected to determine the success of this year's summit.

Latest News

  1. EU nears deal to fingerprint six year-old asylum seekers
  2. Orbán's Ukraine-veto threat escalates ahead of EU summit
  3. Can Green Deal survive the 2024 European election?
  4. Protecting workers' rights throughout the AI revolution
  5. Russia, the West, and the geopolitical 'touch-move rule'
  6. Afghanistan is a 'forever emergency,' says UN head
  7. EU public procurement reform 'ineffective', find auditors
  8. COP28 warned over-relying on carbon capture costs €27 trillion

Stakeholders' Highlights

  1. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  2. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  3. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  4. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?
  5. Georgia Ministry of Foreign AffairsThis autumn Europalia arts festival is all about GEORGIA!
  6. UNOPSFostering health system resilience in fragile and conflict-affected countries

Join EUobserver

Support quality EU news

Join us