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New Market Study Published: Spain Power Report Q2 2013

Recently published research from Business Monitor International, "Spain Power Report Q2 2013", is now available at Fast Market Research


Boston, MA -- (SBWIRE) -- 05/28/2013 -- Spain's economy continues to struggle, with full year real GDP estimated to have contracted by 2.1% in 2012, with a further contraction of 0.5% forecast for 2013. The tax on utilities, approved by the government in September 2012, has not been popular with the energy sector; Endesa and Iberdrola decided to close nuclear power station Garona seven months before its deadline, as a result. And cuts do not end here. Further reforms were introduced in February 2013, which will affect the renewable energy sector in particular. While the government has to address the tariff deficit - estimated to stand at EUR28bn - such measures are only discouraging investment in the energy sector. Electricity consumption rates are also declining, reducing revenues further. BMI expects that 2013 will be characterised by a number of divestments of less profitable business units and divisions, as utilities tighten their belts and concentrate their efforts on core areas of their businesses.

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Spain has a varied energy mix, tapping into thermal, nuclear, hydroelectric and renewable sources of power, thereby reducing the country's dependence on one source of electricity. Gas continues to account for the majority of energy provision, with imports from Algeria accounting for over 25% of Spain's gas requirements. In the 2012-2022 period, Spain's overall power generation is expected to increase to 310.1 terrawatt hours (TWh). Driving this growth is an annual 3.2% gain in gas-fired generation.

Following an estimated contraction in real GDP of 2.1% in 2012, BMI forecasts average annual growth of 1.3% between 2012 and 2022. The population is expected to rise from an estimated 46.8mn in 2012 to 49.0mn by 2022, and net power consumption looks set to increase from an estimated 254.0TWh in 2012 to 297.3TWh by end-2022. Over 2012-2022, the average annual growth rate for electricity demand is forecast to be 1.6%. The country's theoretical net export capability by 2017 is forecast to be 8.2TWh, which we see falling over the second half of the forecast period, to see Spain having the potential to export 2.7TWh by 2022.

The key trends and developments in the Spanish electricity market are:

- In February 2013, Iberdrola announced plans to begin a five-year programme to replace over 10mn meters with smart meters, as well as the adaptation of 80,000 transformer stations. The initiative will cost around EUR2bn.
- Endesa and Iberdrola confirmed that it has no intention to reopen Garona nuclear power station, which closed in December 2012, despite the fact that some government officials want to extend its operating life to 2019. The utilities have attributed the shutdown of the power station to economic reasons, following the introduction of two taxes.

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