New Market Report: Spain Power Report Q4 2013
Fast Market Research recommends "Spain Power Report Q4 2013" from Business Monitor International, now available
[UKPRwire, Wed Oct 30 2013] Spain is poised to see a radical change in its electricity market, as the government attempts to change regulation and bridge the widening between the cost of electricity and the tariffs charged to end users. The government claims that new legislation - approved in September 2013 - will help avoid a rise in electricity prices of around 40%, but even so, many players in the market are unimpressed. The real losers in this reform will be small-scale renewable energy producers, who will have to pay new fees. Additionally, calls for a widening of the scope of the unregulated tariff have also raised criticisms; the National Energy Commission, for example, believes that there is not enough competition in the market to encourage greater liberalisation. With changes ahead, and Spain's weak economy overshadowing events, we expect that growth will be slow in the electricity market, with foreign investors preferring to wait until the regulatory environment is clearer, and the economy in a position to offer guaranteed returns on investment.
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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. In the 2012-2022 period, Spain's overall power generation is expected to increase to 312.5 terawatt hours (TWh). Driving this growth is an 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 2012-2022, 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 see falling over the second half of the 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:
* Spain's government approved its Electricity Sector Law in September 2013. This sees a complete overhaul of regulations for the power sector in an attempt to bridge the EUR4.5bn gap between the cost of electricity and the charges paid by end-users. Spain's National Energy Commission (CNE) has been a vocal critic of parts of the law, namely in terms of changes to regulated and unregulated tariffs.
* Iberdrola signed a EUR200mn loan deal with the European Investment Bank in September 2013, as part of the utility's investment programme and efforts to modernise its electricity distribution network.
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