Spain and Portugal got the go-ahead from the European Commission on Wednesday to start directly subsidising electricity production, amid spiking costs for consumers.
EU Competition Commissioner Margrethe Vestager said in a statement that under the plans, Spain and Portugal can help consumers hit hard by the rise in electricity prices due to Russia’s invasion of Ukraine.
The temporary measures, valued at 6.3 billion euros (6.8 billion U.S. dollars) for Spain and 2.1 billion euros for Portugal, are to lower costs of electricity production for suppliers in the Iberian energy market.
The aim is to pass on the savings achieved in fossil fuel-fired electricity producers to consumers.
The subsidies, in the form of grants and are to remain in place until May 31, 2023.
Madrid has come under severe public pressure to address extraordinary energy costs linked to hikes in wholesale electricity prices in Spain exposed to gas price increases due to Russia’s invasion of Ukraine.
Spanish Prime Minister Pedro Sanchez has pushed hard for wider market reform of the European Union’s energy market.
He argued that the price of electricity should be decoupled from the cost of gas and other fossil fuels.
Sanchez has previously announced 16 billion euros in state aid and loans to help businesses and households weather the sharp rise in energy costs due to the war in Ukraine. (dpa/NAN)