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In order to contribute to an objective debate on decoupling the electricity price from the gas price 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.

 

The Executive Summary of the second part of the study regarding the EU-wide implementation of the "Iberian Model":

  • This study shows that the implementation of the Iberian model at EU level does not lead to a large increase in electricity exports from the EU.
  • An EU-wide implementation of the Iberian model only leads to a noteworthy increase in exports at two borders. (Turkey and UK)
  • Electricity demand increases by exports by about 45 TWh (about 1.5% of EU gross electricity generation). Accordingly, gas demand also increases only slightly.
  • This disproves the frequently expressed concerns that the EU-wide implementation of the Iberian model would lead to a massive increase in gas demand due to a substantial increase in electricity exports.
  • At the same time, the study makes clear that it would be favourable to seek a political solution with Turkey and the UK in order to be able to completely exclude an increase in electricity exports.

 

Together with the already published first part of this study and the study on the estimation of the economic effects, the following conclusions can be drawn:

  • The implementation of the Iberian model is an effective measure to significantly reduce the electricity exchange price.
  • With an EU-wide implementation, the negative effects caused by "free riders" will be significantly reduced.
  • As there will be no shift in the merit order, no significant changes in the intra-European power flows are to be expected.
  • Due to the relatively low border capacities to the outside, an EU-wide implementation is significantly more efficient than the current implementation in Spain and Portugal.
  • The overall economic cost-benefit ratio is clearly positive.
  • To achieve the same cost reduction, much less resources have to be used than in comparison to direct subsidies to end consumers against high energy prices.
  • A reduction in wholesale electricity prices can prevent a competition in internal EU subsidies in the electricity sector.
  • Positive macroeconomic welfare effect: Due to the comparatively low costs, clearly positive macroeconomic effects can be estimated (inflation, higher disposable income with positive effects to consumption, lower costs with positive effects on competitiveness).