A large Spanish sector relies on cogeneration to power its processes, especially in ceramics, paper, and food production. Despite a broad energy crisis, the industry insists it is not in a critical position. Yet, more than half of cogeneration capacity has paused in recent months because generating electricity from heat produced by factories becomes unprofitable as gas prices rise and the government has not taken steps to ensure power plants cover their costs.
This employer coalition, representing around 600 factories nationwide through cogeneration, argues that government inaction has forced them into double losses. They point to the Iberian exception and to the failure to update the fees assigned to factory cogeneration under the Recore system, which is meant to guarantee a minimum return for regulated renewable facilities. Faced with this situation, employers are preparing a legal strategy in both Spain and the European Union. They anticipate a wave of lawsuits from affected companies. [citation: industry briefing, European energy policy monitoring]
Electricity reached its third-highest price of 459.4 euro/MWh on Tuesday
The business association contends there is clear discrimination against crops after the Iberian exception took effect in the electricity market. The price cap mechanism for gas-fired electricity generation, introduced last June, compensates gas-fired plants to cover real costs amid rising international gas prices but does not extend the same relief to cogeneration. As a result, only a portion of cogeneration plants remained active to avoid paralysis. [citation: energy market analysis]
Moreover, there is acknowledgement that the government has not officially updated cogeneration fees under the Recore system for more than two years. The Ecological Transition Ministry’s latest August proposal uses a gas price estimate of 90 euros per MWh for calculations, while payments to gas-fired plants reflect costs that often exceeded 200 euros per MWh on many days. [citation: official proposal summary]
Complaint in Brussels
A cogeneration-focused industry group has outlined a legislative plan to urge the government to act. Acogen has begun administrative procedures with both the European Union and national authorities. If those efforts fail, cases could move to Community and Spanish courts. A former Acogen executive notes, I don’t want to go to court, but it may be the only option left. Dialogue with the Ministry of Ecological Transition remains ongoing, though some describe it as slow to respond. The government challenges the core demand to bear the costs driven by the rise in gas prices. [citation: interview notes]
Last July, the employer filed a complaint with the European Commission over perceived discrimination faced by cogeneration plants compared with large gas-fired power plants due to how the Iberian gas cap was designed. In Portugal, cogeneration is compensated by the same mechanism as combined cycles. The group expects and threatens to involve Brussels if Spain does not address the issue and may refer the case to the Court of Justice of the European Union unless a remedy is found. [citation: EU regulatory filings]
Damages
Separately, Acogen has appealed to the Secretary of State for Energy over the two-year delay in updating the Recore fee for cogeneration. The position is that government action should have published the adjustment in the Official State Bulletin; without it, a legal path to higher courts remains blocked. The association emphasizes that the current situation amounts to a legal setback and that the industry feels powerless as costs keep rising with gas prices. [citation: regulatory timeline]
The first step in this administrative process is to seek a response from the Ministry. If there is no reply within three months, a wave of lawsuits in the Supreme Court could follow, seeking damages for cogeneration facilities. The central question remains whether the government will activate the same compensation mechanism used for gas-fired plants, with the Iberian exception excluded, or revise the Recore fees to reflect true gas costs. The industry warns that without action, most cogeneration facilities will operate at a loss, with only the most resilient plants continuing to run, while others may suspend operations. [citation: legal outlook]