Gas price limit announced by Spanish Prime Minister

by Lorraine Williamson
gas price limit

MADRID – The Iberian price limit for gas-fired electricity generation will result in an average price of €48.80 per megawatt-hour (MWh) for one year. That is slightly below the announced €50/MWh. 

As a result of this ‘border adjustment’, the export of electricity to other countries is compensated at the agreed price. This is lower than the price that would apply without an adjustment mechanism. 

The gas cap is to be approved today (Friday) at an extraordinary council of ministers. Furthermore, it was mentioned by the Spanish prime minister at an event regarding the EU’s Next Generation Funds. That cap will guarantee an average price for one year. This provides “important protection against future increases in international energy prices in a geopolitical scenario of enormous volatility,” Sánchez said. The prime minister warned that the current energy context, marked by the war in Ukraine, will “take a long time”. 

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The Prime Minister welcomed the negotiations being held in the EU for the recognition of the “Iberian exceptionalism”. Moreover, that will allow Spain and Portugal to set that ceiling. Initially, it will be set at €40/MWh and formally approved by the Council of Ministers this Friday, at the same time that Portugal will do so after receiving approval for the European Commission’s plan. 

‘No subsidising gas’ 

Sánchez previously emphasised that this measure “does not subsidise gas, does not break incentives for renewable energy sources or electricity flows between countries”, but will allow Spain and Portugal to “immediately significantly reduce electricity prices” and without “disrupting” the European electricity market. 

See also: Spain and Portugal reach an agreement with Europe on a gas price limit 

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