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AK is convinced that the EU-wide implementation of the "Iberian model" to decouple the electricity price from the gas price would contribute significantly to reducing the economic costs of this crisis.

 

In order to contribute to an objective debate and to create the basis for a quick implementation, AK has commissioned the Austrian Energy Agency (AEA) to examine the effects of the implementation of the Iberian model in a two-part study.

 

Summary of the results:

  • The introduction of the Iberian model has led to a significant reduction of the electricity spot price levels in Spain and Portugal.
  • The observed higher gas consumption results in:
    • 1/3 to the lack of alternative power generation possibilities during the 2022 summer period,
    • 1/2 to an increase in electricity exports (FR, MAR) and
    • 1/10 to a higher electricity demand. The reason for this higher electricity consumption may not only be a cheaper electricity price, but could also be linked to the fact that there were high temperatures during the analyzed time period.
  • Since all fossil power plants are subsidized and both input and output prices are regulated, a shift in the merit order can be excluded. Thus, there is no direct incentive for power plants to use more gas.
  • With a target price of over 100 Euro/MWh, high incentives for investments in renewable energy remain.

 

These results contradict the frequently expressed fears that the Iberian model would lead to significantly higher gas consumption. In addition, the study shows the great advantage of an EU-wide implementation. If effects at the EU's external borders are anticipated, an increased demand through electricity exports is not to be expected. An EU-wide implementation would therefore be even more effective and cost-efficient.

If you have any questions, please do not hesitate to contact us

Josef Thoman

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Peter Hilpold (Brussels office)

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