EU approves Spanish, Portuguese subsidies covering gas cost

The European Commission has cleared according to EU state aid rules plans by Spain and Portugal to subsidise the price that gas-fired power stations pay for gas supply, it said on June 8.

In an effort to bring down electricity costs for consumers, Spain and Portugal plan to provide €8.4bn ($9bn) in subsidies, enabling power plants to pay no more than €48.8/MWh for gas supply on average until the measures expire on May 31, 2023. During the first six months, they will pay no more than €40/MWh, and then will increase by €5/MWh each month until a €70/MWh cap is reached in the twelfth month.

The subsidies will be financed with income that Spain's transmission system operator earns cross-border power trade with France, and with a charge imposed by Spain and Portugal on buyers that benefit from the measure.

European commissioner for competition Margrethe Vestager said the subsidies would allow Spain and Portugal "some time to enact reforms that will increase the future resilience of their electricity system, in line with the Green Deal objectives, and will ultimately mitigate even further the effects of the energy crisis on final consumers."