in the last few weeks some politicians in europe have been talking about a price cap on gas prices.
spain and portugal have been authorised to set a price cap on gas prices until May 31st 2023.
Now, I always wondered how it works cause a) I'm not an economist b) I never really understood why russia should accept such a measure.
well, 's how it will work in the iberian peninsula:
The measure will apply until 31 May 2023. The support will take the form of a payment that operates as a direct grant to electricity producers aimed at financing part of their fuel cost. The daily payment will be calculated based on the price difference between the market price of natural gas and a gas price cap set at an average of €48.8/MWh during the duration of the measure. More specifically, during the first six months of the application of the measure, the actual price cap will be set at €40/MWh. As of the seventh month, the price cap will increase by €5 per month, resulting in a price cap of €70/MWh in the twelfth month.
The measure will be financed by: (i) part of the so-called ‘congestion income' (i.e. the income obtained by the Spanish Transmission System Operator as result of cross-border electricity trade between France and Spain), and (ii) a charge imposed by Spain and Portugal on buyers benefitting from the measure.
spain and portugal have been authorised to set a price cap on gas prices until May 31st 2023.
Now, I always wondered how it works cause a) I'm not an economist b) I never really understood why russia should accept such a measure.
well, 's how it will work in the iberian peninsula:
The measure will apply until 31 May 2023. The support will take the form of a payment that operates as a direct grant to electricity producers aimed at financing part of their fuel cost. The daily payment will be calculated based on the price difference between the market price of natural gas and a gas price cap set at an average of €48.8/MWh during the duration of the measure. More specifically, during the first six months of the application of the measure, the actual price cap will be set at €40/MWh. As of the seventh month, the price cap will increase by €5 per month, resulting in a price cap of €70/MWh in the twelfth month.
The measure will be financed by: (i) part of the so-called ‘congestion income' (i.e. the income obtained by the Spanish Transmission System Operator as result of cross-border electricity trade between France and Spain), and (ii) a charge imposed by Spain and Portugal on buyers benefitting from the measure.
