Insight
The Iberian price cap: Suppressing the rising cost of power
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Report summary
On 14 May 2022, the Spanish government approved an Iberian temporary price cap mechanism for certain fuels used in power generation to mitigate high energy price-induced inflation, but the cap has been deferred and is awaiting final authorization from the European Commission. Gas price caps could lower Spain’s power prices by 32% to 130 EUR/MWh, but wind and solar capture prices still remain attractive at over 125 EUR/MWh in 2022-23. This insight evaluates the impacts and implications of the price cap.
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