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The extension of the Iberian gas price cap has received formal approval from Brussels to run through the end of the year, following prolonged negotiations. Spain and Portugal, in concert with the European Commission, secured clearance from Competition Commissioner Margrethe Vestager to renew the Iberian mechanism, which had expired on May 31. The confirmation came through official channels in Madrid and Brussels. Teresa Ribera, the third vice president and minister for Ecological Transition, was in the European capital for energy talks when the decision was announced.
Ribera, who is attending the Twenty-Sixth Energy Council in Brussels, is expected to bring up the extension during Spain’s weekly cabinet meeting in Madrid. The Council of Ministers is anticipated to approve the extension and refine the pricing framework of the mechanism. The move aligns with ongoing efforts to stabilize supply and manage costs for consumers across Iberia (European Commission, 2024).
Since 15 June, the so-called Iberian exception has provided relief to consumers by capping gas-fired power generation. The Ministry of Energy Transition has quantified the impact at roughly 5.1 billion euros in savings. The cap targets gas-based generation within combined cycles, coal-fired plants, and certain cogeneration facilities. In 2022, the cap was set at 40 euros per megawatt hour (MWh); from January through May, the cap rose by 5 euros each month to adapt to market conditions (Ministry of Energy Transition, 2022–2024).
Officials indicate the extension will extend through 31 December this year, with a projected path that nudges the price from 55 euros per MWh in March to 65 euros per MWh by year-end. Without approval, pressure would have mounted on the May price level and could have amplified volatility in the near term (Energy Ministry briefing, 2024).
Earlier in January, Ribera signaled the objective of extending the mechanism at least through the end of 2024 in Brussels. Subsequent political and technical discussions took place among Spain, Portugal, and the European Commission’s Competition Department led by Vestager. Late January discussions considered a longer extension, potentially to December 2023, given the temporary Ukraine wartime support framework in place at that time (Brussels negotiations, January 2024).
In the weeks that followed, EC sources noted the energy crisis triggered by Russia’s invasion and stressed the need to promptly evaluate the compatibility of emergency measures within that context. Talks included a bilateral summit between Spanish President Pedro Sánchez and Portuguese Prime Minister António Costa, with Madrid noting discussions held on the island of Lanzarote (European Commission reports, 2024).
Despite the extension, the gas market has shown limited immediate relief. Since mid-February, the outlook for price relief in gas has been modest, with prices lingering around 40 euros per MWh. In March the price rose to 55 euros per MWh, yet volatility remains a factor due to ongoing geopolitical tensions. If the war in Ukraine continues to influence markets, further fluctuations could occur in the weeks ahead (Market briefs, 2024).
During an event hosted by El Español earlier this week, executives from energy companies indicated that prices could move higher in the coming months, driven by ongoing Russian gas deliveries to Europe, a rebound in Chinese demand, and seasonal weather changes. Loreto Ordoñez, chief executive of Engie Spain, commented that electricity prices may not return to pre-crisis levels until 2026, highlighting the longer-term uncertainty facing European energy markets (El Español event coverage, 2024).