BAKU, Azerbaijan, September 14. Subsidies for the Iberian gas-fired plants may have a backfire effect, Trend reports with reference to Rystad Energy.
“Subsidies of €8.4 billion were set aside to support the Iberian gas-fired plants, compensate their electricity production cost, and eventually reduce the customers’ electricity bills. However, this measure could potentially increase gas consumption rather than reducing it,” reads the latest report published by Rystad Energy.
The European Commission and European leaders are struggling to mute an energy crisis that has already created economic turmoil across the continent and added huge energy cost pressure to millions of gas and electricity consumers.
EU members held a meeting on 9 September to discuss imposing price caps on gas imports. It is still unclear whether a price cap would be applied to all gas imports, however. Most EU members seem more inclined to favor a proposal to impose a feasible price cap on all gas imports rather than only on Russian gas, as the European Commission suggested originally.
Rystad Energy believes that expansion of the existing Iberian gas price cap measure to cover all of the EU level may not work.
“Compared to the same period in 2021, the total Spanish power generations are 24.9 TWh and 23.9 TWh in July and August respectively, which represents 17 percent increase (or about 3.6 TWh) for both months in 2022. This power demand growth is primarily supported by the surging gas-fired generation with the jump of 72 percent (or 3.6 TWh ) and 54 percent (or 2.8 TWh) respectively in July and August this year after the Iberian gas price cap took effect in mid-June, according to Spanish power generation monitor. Norway, currently the biggest pipeline gas supplier to Europe, is skeptical to the possibility of a price cap on all gas imports because a price cap will not solve the fundamental problem of a gas shortage in Europe,” the report says.