Industrial sector in Spain wants more compensation for high energy prices

by Lorraine Williamson
high energy prices

MADRID – Spanish industrial companies are sounding the alarm about the ever-rising, high energy prices. The government must take the same measures as countries such as France and Germany. Otherwise, it will seriously weaken competitiveness and deter investors. 

This mainly concerns companies in the metal, chemical, iron and paper industries, which consume a lot of electricity during production. For them, the sky-high energy price means an ever-increasing cost item that is at the expense of profitability. This is much less the case for competitors in France and Germany. The reason is partly that they are more generously compensated for these expenses by the government. 

According to President José Antonio Jainaga of the Basque iron producer Sidenor, monthly energy costs will be between €4-5million higher in the last quarter of this year. That means a cost item of €50million on an annual basis. “That is a disaster for our balance sheet,” said Jainaga. 

European countries aligned 

General director Fernando Soto of employers’ organisation AEGE for electro-intensive companies indicates that electricity prices have risen throughout Europe. But emphasises that the increase has been especially explosive in Spain. For companies with high energy consumption, the electricity bill now accounts for more than half of all expenses. At the end of August, these companies had to pay €96.82 per MW. This is €34 more than competitors in Germany and €55 more than competitors in France. According to Soto, the Spanish government does not have to reinvent the wheel, but can follow the example of the said countries: granting exemptions and paying compensation to the maximum possible. 

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High energy prices in Spain

The Spanish government has not done anything at all. In June an additional compensation of €100million was approved to compensate the electro-intensive industry for the expensive electricity price due to expensive CO2 emission rights. In total, a fund of €179million has been made available for this sector. He considers this amount insufficient because, firstly, it is below the €220million that the EU has set as a maximum, and secondly, because the other European countries mentioned are paying a higher amount. 

As the industrial sector competes with each other not only within but also outside Europe, the electricity price, together with the salary, is the most important factor to remain competitive in the market. So, according to the Spanish producers, the government should help to maintain its competitive position and avoid falling behind because other governments provide more support. 

Passing on the high electricity price to customers is impossible, according to Jainaga. Electro-intensive companies conclude annual contracts with their customers and only the price increase of raw materials is passed on therein. Moreover, they will not suddenly start paying much more if other European producers do not increase their prices. 

‘Silent decline’ 

Fernando Soto of AEGE, therefore, addresses the government directly with an urgent request for help. “We are convinced of the need to reduce CO2 emissions, but the rules must be the same for all companies. Investors will not be interested in us, causing a ‘silent decline’. This means that the money that is actually intended for the maintenance and renovation of the installations must now be used for energy consumption,” says Soto. 

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