electricity relief measures and funding sources
The government approved an extraordinary loan of 2,000 million euros, intended to help finance a portion of the electricity bill discount announced for this year and the next. This step was published in the Official State Gazette, confirming another move in the government’s multi-year plan to curb inflation and support households. The lent amount is substantial when compared with other national costs and exceeds the usual annual cost of the electricity system, which typically runs around 17,000 million euros. The measure arrives alongside a broader set of fiscal actions designed to ease consumer bills and stabilize prices during periods of elevated energy costs outside the peninsula.
The decree explains the decision by pointing to high electricity prices that have driven up electricity system charges. This charge is one of the components of an electricity bill that funds renewable energy projects, along with tolls, taxes that are reduced to 80 percent, and the wholesale market price. The decree also notes a tariff gap affecting peninsula regions and describes a planned 30 percent discount on the charge component, with a forecast for a further reduction of nearly 10 percent in 2023 to mitigate rising energy costs.
Also throughout the year, the tax on production value for electricity, including VAT deductions and the Special Electricity Tax, will continue until 31 December of the next year. The objective is to ensure the electricity sector receives as much relief as possible by reducing the tax intake.
In the absence of these revenues, the decree highlights that high CO2 emission rights prices have generated extraordinary income in the 2022 fiscal year. The Treasury budget implementation report shows that state collections from these tenders reached about 3,000 euros by the end of November, which was 32 percent higher than the previous year. The government described these revenues as a one-time surplus that could offset charges for the following year.
Consequently, there is a likelihood of using a portion of that money in the next year. If the electricity fund closes the current year with a surplus rather than a deficit, the surplus could be directed toward 2023 electricity bills, providing a buffer against future pricing pressures. This approach to using year-end surpluses has been common in recent years as a practical mechanism to stabilize consumers’ bills.
renewable moratorium
Beyond the relief package just described, the energy strategy includes additional measures. The administration has raised self-consumption limits above 2,000 meters and approved a three billion euro loan to support the last-resort natural gas ratio, ensuring supply during transitional periods. An 18-month moratorium on renewable projects that lack access permissions has also been approved to prevent speculative moves. This suspension is not aimed at projects already in the pipeline which expire on January 25, but rather at the special circumstances affecting utilities that cannot discharge electricity into the grid, according to sources from the Ministry of Transition.
For a period of two years, access to the network is managed within a competitive framework. When potential nodes with available capacity are identified, Red Eléctrica coordinates the process. No tenders have yet identified winners, but a public instruction prioritizes selecting one of the available access points so that facilities can be brought online quickly. This approach follows the royal decree law, which calls out speculative moves by some agencies that begin procedures without continuity and that block layouts needed by other entities pursuing renewable projects. Consequently, the government has suspended procedures for projects that aim to evacuate power at tender nodes but lack the required access and connection permissions.