A study by Esade makes clear that the mechanism carries the risk of leading to a “grant to those who do not fund it”, such as France
Three months after the entry into force of the Iberian cap, the measure limiting the price of gas for electricity production in Spain and Portugal, there will be a first comprehensive analysis of the impact of that decision, endorsed by Brussels. EsadeEcPol, the economic policy research center of Esade, has calculated that the savings in a Spanish household during this period is 69 euros. That is about 23 euros per month.
The calculation is made for a house with a consumption of about eight kilowatt hours (KWh) per day – about 240 kilowatts per month – covered by the regulated tariff, the cost of which would have been 24% higher. According to the study, the size of the Iberian cap has “achieved its central goal”.
Specifically, the results of the estimate indicate that, with “high confidence”, the average price of electricity for consumers in the regulated market would have been between 19% and 30% higher without the cap, with an estimate point of 24.4%. As described by Esade, the calculation model offers “almost guarantee” that this decrease is not due to other causes or random phenomena.
However, there are side effects to the Iberian hood, as numerous experts have pointed out in recent months. The report concludes that this saving entails “significant costs” in the sense that since the entry into force of the measure, the consumption of gas for electricity generation has increased “in particular”, i.e. by about 139 gigawatt hours (GWh) per day during the whole period.
“We also see that this increase has occurred at the same time that the use of other technologies has declined, especially cogeneration and hydropower. Of course, it should be borne in mind that the context of pronounced drought during this summer that has hampered hydroelectric power production prevents this decline from being attributed to the new measure,” the study adds.
Despite this, the researchers point out that the data obtained suggests that the gas limit may reduce the incentive for transitioning to non-polluting sources, “at least when it coincides with adverse events for clean technologies.” “In particular, the opposite effect occurs: an incentive to use gas, which is undesirable in the current European context, which simultaneously sets short-term savings and long-term goals for decarbonisation,” emphasizes the study.
On the other hand, the application of the Iberian mechanism has also had an impact on electricity exports to France and Portugal, which, according to the study, have “increased significantly”. In this sense, the third vice president and minister for the ecological transition, Teresa Ribera, has acknowledged on several occasions that the situation of the French nuclear park causes the French country to import “maximum” electricity from neighboring countries, while also emphasizing that 25% of the electricity consumed in Portugal comes from Spain.
Esade even emphasizes that if the current trend continues, electricity exports will double by the end of the year compared to 2021.
The report also underlines that the cap on gas, regardless of the savings achieved, risks being a “subsidy for those who do not fund it”, citing French consumers. “Both events take place in a context of failure of the nuclear power plant, the basis of France’s electricity supply, which complicates the interpretation of the data. However, it serves as an example of what could happen with a measure similar to this compensation applied across the EU and with its Member States’ interconnections abroad: a “leakage” of the money invested could occur in the form of increased electricity-based gas consumption to border countries that would benefit from such an investment at no cost,” the study adds.
Source: La Verdad
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
