Clifford Chance
Spanish government temporarily reduces remuneration paid to power producers in an attempt to lower the price of electricity
17 September 2021
Spanish Royal Decree-Law 17/2021 ("RD-L 17/2021") entered into force on 15 September 2021; it temporarily reduces the remuneration paid to certain power producers.
Aim of the Reduction
The aim of the reduction set out in RD-L 17/2021 is to lower the price of electricity for end users, as it is currently at all-time highs. These high prices are due to the effect that the increase in the price of natural gas has had on the marginalist system of the electricity market, which internalises that price of gas. The aim of RD-L 17/2021 is thus to have those energy producers who do not bear the costs of gas to generate electricity, to give back the "excess" remuneration to the electric system (when the price of gas exceeds €20/MWh), to apply it to reducing the charges on the electricity bill, thereby forcing distributors to pass that discount on to end users.
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