Eurelectric statement on the Spanish electricity tax proposal

Spain proposes to tax competitive wind, hydropower and nuclear electricity production

Eurelectric, representing the European power sector, is a firm supporter of the European Union (EU) climate targets for both 2030 and 2050. Our sector aims to deliver sufficient decarbonised
electricity to meet these targets.

In this context, the European power sector has serious concerns about the Spanish draft law for new regulation of the Spanish electricity market. Such a proposal, should it become law, will
hamper Europe’s ability to reach its climate commitments by weakening investor confidence. The proposal will apply to hydropower, wind, and nuclear power plants that were connected to the grid before 2005 and no longer benefit from any support scheme. Today, these power plants get their revenues exclusively from the wholesale power market, which reflects carbon costs under the principle of the “polluter pays”. This principle is the foundation of a market that delivers on the Green Deal climate goals.

“The proposal would introduce regulatory instability and distort proper market incentives to invest, not only in future renewables but also to operate existing non-emitting assets. This is worrying” - Secretary General of Eurelectric, Kristian Ruby

Eurelectric calls upon the European Commission to ensure Member States do not hinder either the functioning of the electricity market or the EU ETS.

Our key concerns are:

1. The proposed measure will strongly disincentivise investments in renewables,
2. It undermines the functioning of the EU ETS and the EU's Internal Electricity Market will also be severely distorted,
3. The draft law further increases the tax burden on electricity – disincentivising electrification,
4. There are better alternatives to achieve the aims of this measure...