Spain will extend a gas price cap for heavy industries operating their own power plants, amid fears Russia could cut off all gas supply to Europe by land or sea, Spanish Prime Minister Pedro Sanchez said on Tuesday.
Sanchez said the government will temporarily change power market regulations to limit the price of natural gas for heavy industries operating their own gas-fired power plants as do some tiles, concrete, or fertilizers makers.
“We will make an exception for big consumers so that they are temporarily covered by the Iberian mechanism,” he said during a speech in Senate, referring to a scheme that temporarily subsidize the natural gas for power generation companies.
In a bid to reduce the influence of high gas prices on electricity bills, while aiming to build more renewable capacity in the long term, Spain and Portugal introduced earlier this year a mechanism to temporarily subsidize fossil fuel plants’ generation costs.
Surging gas prices have caught out companies in energy-intensive businesses who now have to choose between selling output at prices below costs or scaling back and reduce production.
Sanchez extended the mechanism to heavy industries as he fears the supply of Russian gas could dry out. Even though Spain is not connected to the Russian gas grid it depends on Russian liquefied natural gas delivered by tankers.
“We don’t know what is going to happen … Nobody knows … (Russian President Vladimir) Putin probably doesn’t even know what steps he is going to take, but the most likely is a total cut-off of Russian gas to Europe.”
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