Fast Market Research

"Spain Power Report Q1 2014" Published

Fast Market Research recommends "Spain Power Report Q1 2014" from Business Monitor International, now available


Boston, MA -- (SBWIRE) -- 02/11/2014 -- Spain's electricity market is struggling in the face of an unclear regulatory environment and a sluggish economy. Keen to cut costs, the government wants to reduce renewable energy subsidies, but it risks the wrath of providers who invested in the market expecting high returns. At the other end of the scale, major utilities have long been demanding increases in electricity prices to plug the gap between the cost of generation and the prices paid by end-users, but proposals for an 11% increase in January 2014 were rejected by the country's newly created regulator. In the face of this confusion, some players may simply choose to invest elsewhere. E.ON is one example of this, with press reports from late 2013 suggesting that the German utility is keen to sell its assets in Spain.

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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 more than 25% of Spain's gas requirements. Over the 2012-2022 period, Spain's overall power generation is expected to increase to 312.5 terawatt hours (TWh). Driving this growth is an average annual 3.0% gain in gas-fired generation.

Following an estimated contraction in real GDP of 1.3% in 2012, BMI forecasts average annual growth of 1.2% between 2012 and 2022. The population is expected to rise from an estimated 46.8mn in 2012 to 47.9mn by 2022, and net power consumption looks set to increase from an estimated 258.0TWh in 2012 to 300.4TWh by end-2022. Over 2012 to 2022, the average annual growth rate for electricity demand is forecast to be 1.5%. The country's theoretical net export capability by 2017 is forecast to be 6.1TWh, which we then see falling over the second half of our forecast period, to see Spain having the potential to export 1.9TWh by 2022.

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

- In December 2013, Spain's Prime Minister Mariano Rajoy studied a new procedure for the establishing of electricity prices. Plans to increase the cost of household electricity bills by 11% on average were rejected by the competition authorities.
- Electricity reforms remain up in the air: Spain's finance minister announced that he had withdrawn EUR3.6bn worth of funding for electricity reforms in November 2013, while there is extra uncertainty in the renewables sector because the government is changing parts of its guidelines regarding renewable energy.
- In October 2013, the government launched a new super regulator - the CNMC - to act as an independent regulatory body, taking on the roles of five industrial and competition authorities.

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