Recently published research from Business Monitor International, "Spain Power Report Q2 2014", is now available at Fast Market Research
Boston, MA -- (SBWIRE) -- 05/05/2014 -- 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. In February UAE renewable energy developer Masdar, owning a 40% stake in Torresol Energy, was the first operator to file an official legal case against Spain 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, capping prices increases at 2.3%. 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 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 2013-2023 period, Spain's overall power generation is expected to increase to 324.0 terawatt hours (TWh). Driving this growth is an average annual 3.6% gain in gas-fired generation and 3.0% in non-hydropower renewables.
Following a contraction in real GDP of 1.2% in 2013 and of 1.6% in 2012, BMI forecasts average annual growth of 1.5% between 2014 and 2023. The population is expected to rise from an estimated 47.1mn in 2014 to 48.0mn by 2023, and net power consumption looks set to increase from an estimated 253.0TWh in 2013 to 309.9TWh by end-2023. Over 2014 to 2023, the average annual growth rate for electricity demand is forecast to be 1.9%. The country's theoretical net export capability by 2017 is forecast to be 5.9TWh, which we then see falling over the second half of our forecast period, to see Spain having the potential to export 3.7TWh by 2023.
Key Trends And Developments
- 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. The government has moved instead to cap the price increase at 2.3% During Q114 - using a temporary procedure that would use futures trading as a benchmark.
- Electricity reforms remain up in the air. Spain's finance minister announced 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.
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