Spain and Portugal ask Brussels for the extension of the Iberian solution to make electricity cheaper

Spain and Portugal ask Brussels for the extension of the Iberian solution to make electricity cheaper



The price tensions in the gas market in Europe have subsided but Spain and Portugal want to continue applying the so-called Iberian exception, the solution agreed in March 2022 to allow decoupling the price of electricity from gas in the Iberian Peninsula that has allowed a substantial price reduction, beyond May of this year, when in principle the measure is set to expire. This was raised today by the Spanish Vice President and Minister for Ecological Transition, Teresa Ribera, and the Minister for the Environment, Duarte Cordeiro, to the Vice President of the European Commission and Head of Competition, Margrethe Vestager, at a meeting held in Brussels.

Hardly any details of the meeting have been revealed: Ribera has left the community capital without making statements to the press and the Portuguese minister has only stated that it has been “a first meeting without decisions”, but both delegations have conveyed the idea that they see it as “receptive”. to the European Commission regarding the possibility of extending the mechanism. What remains to be seen is whether Brussels accepts it on the same terms or, given the new market conditions, proposes changes to the price threshold from which the mechanism would be activated.

The technical services of the European Commission will examine the request

“It has been a positive meeting, with which the process to study the extension of the Iberian solution begins,” the Ministry for the Ecological Transition and the Demographic Challenge said in a statement. “The technical teams of the European Commission are now in charge of carrying out the analysis work in order to determine the possible extension of the Iberian solution,” they add. The meeting between Ribera, Cordeiro and Vestager has lasted for around 90 minutes and in it the technical teams of the three parties have analyzed the operation of the mechanism. In the case of Portugal, according to the press release issued by the Government, the savings achieved have been 489 million euros for all customers of the wholesale market, who have benefited from an average reduction of 20% in the price of the electricity.

Already in November, Vice President Ribera expressed in Brussels her willingness to request an extension of the Iberian mechanism despite the measures approved at the European level to try to lower the price of electricity. The specific conditions for which the adoption of this mechanism was accepted, the high degree of renewables produced by Spain and Portugal and their status as energy islands compared to the rest of the European electricity market, have not changed, she argued. The Portuguese Government, for its part, reiterated yesterday in the Lisbon Parliament that it wants an extension of the average “under the same conditions” as the current ones.

The Iberian Peninsula, a “unique” situation in the European electricity market

Once agreed by the European leaders, at the March 2022 summit, that both countries could, due to these “singularities”, apply a different pricing mechanism, the proposal was submitted to the examination of the European Commission, which the mechanism as if it were State aid. In practice, the cost of the measure has not been passed on to the State coffers but to gas consumers, but without allowing the high level of prices to contaminate electricity rates.



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