Spain's parliament voted in favor of a raft of "emergency measures" in parliament Thursday, confirming a suspension of a 7% generating tax and an exemption for natural gas used in power generation from the "green cent" tax.
'Green cent' tax cut for gas also approved
Wholesale prices already down
Windfall profit proposals to come
The new legislation has been approved as a so-called proyecto de Ley, meaning that modifications can be made in the near future. The parties from the ruling coalition voted in favor, while the opposition block largely abstained from the vote, allowing the decree to pass.
Besides the immediate tax cuts, the legislation also includes a scrapping of the so-called solar tax on prosumers of photovoltaic energy and an increase in the cap on income that the government can divert from CO2 emissions auctions, among other social measures.
The emergency measures have already been applied and have seen market prices fall on both the curve and prompt.
The Spanish Q1 2019 contract on the EEX exchange has dropped from Eur65.75/MWh on October 4 (prior to the decree) to Eur62.54/MWh on October 18 while the day-ahead price on the OMIE exchange has fallen from Eur73.88/MWh to Eur65.30/MWh over the same period.
Looking ahead, the government has outlined further plans for market reforms, which it intends to push through parliament.
Chief among these is a potential cap on what it calls "windfall profits" from nuclear and hydro plants.
This could lead to an overall reform of the market structure, that the current government views as "outdated."
Additional legislation will also be required for the government to push ahead with an ambitious renewable target of 7 GW per year of new installations.
There is already a move towards repowering of existing sites and plans for a new round of renewable auctions from 2020, while Ecological Transition Minster Teresa Ribera has made it clear that the rollout of storage systems is also high on the longer term agenda.
