Spain and Portugal have created an extraordinary and temporary mechanism in Spain and Portugal to protect consumers from the rise in electricity prices, by setting a gas price cap for natural gas used to generate electricity in gas-fired, dual-fuel-fired and cogeneration power plants over the next 12 months. The cap will be set at €40/MWh for the first six months, before rising by €5/month to €70/month at the end of the year (average price gas of €48.80/MWh for the whole length of the intervention).
The scheme is expected to help decouple gas prices and electricity prices and to aid consumers exposed to the evolutions of the wholesale electricity market. Around 40% of domestic consumers in Spain, and between 70 and 80% of industrial consumption, are tied to the wholesale market price.