Spain
Spain meets 99% of its demand for oil and natural gas through imports. Coal is the only fossil-fuel resource that the country possesses in significant quantities although production is uneconomic today.
Spain’s coal sector has undergone restructuring since the 1990s. Most coal companies have low annual production capacities (<500 000 tonnes). Previously, the government used to set minimum volumes of domestic coal for use in local power plants in any given year as a means to support the sector. Since 2015, this mechanism no longer exists. State-owned company HUNOSA (Hulleras del Norte S. A.) was a major employer in the Spanish coal industry.
Spain’s oil sector is entirely deregulated and in private hands, with a large number of companies playing an active role in both the wholesale and retail markets. Repsol partly or fully owns five out of the ten refineries in Spain, accounting for 56% of the total refining capacity.
The liberalisation of the Spanish gas market started in 2000 with reforms implemented up until 2008. However, Spain’s organised gas market (MIBGAS) saw its formation after other EU countries opened theirs: operations started in 2015 with 82 registered agents. Gas volumes traded in MIBGAS only accounted for 7% of the Spanish gas demand in 2018 with the most important part seen in bilateral (or over-the-counter) transactions. In gas distribution, Naturgy (formerly Gas natural Fenosa), the incumbent company, still holds 40% of gas sales in terms of volume, 55% of consumers and the bulk of the country’s gas distribution network. Competition in the gas supply market continues to open in the last few years that by December 2017, 79% of customers, representing 97.9% of demand, were on free market contracts. Enagas owns nearly all of the transmission system, including a significant share in all except one (Mugardos LNG plant, owned by Reganosa) of Spain’s LNG plants.
Spain was among the first EU countries to liberalise its electricity market. After major restructuring, the Iberian wholesale electricity market (MIBEL) covering both Spain and Portugal stands as unique, seeing more than 80 relevant players in the generation side and more than 330 on the supply side as of 2017. The three largest players accounted for just 57% of the total generation in 2017. Following liberalisation, nearly two-thirds of electricity consumers have switched suppliers with around 1.9 million consumers doing so in the last three years. Red Electrica de España (REE) accounts for most of the transmission assets while Iberdrola, Endesa and Naturgy are the largest distributors.
The Comisión Nacional de los Mercados y la Competencia (CNMC) is the national energy regulator and is responsible for ensuring effective competition in energy markets.
All energy prices in Spain are set by the market except for liquefied petroleum gas (LPG), the price of which is set according to a formula based on international prices, a distribution margin and a maximum LPG price revised on a bi-monthly basis. Aside from this, a regulated price based on the prevailing hourly electricity market rate is available to small-scale electricity consumers, for whom the government has nominated eight suppliers. A similar regulated pricing for gas, known as the last resort tariff, exists on a voluntary basis for households and is revised on a quarterly basis. In the wake of a recent legal reform, the CNMC will be able to propose tariffs for third-party access to the electricity grid and all basic gas infrastructures (e.g. pipelines and LNG facilities). Energy products in Spain are generally subject to VAT at the normal rate of 21% and exemptions apply for commercial purposes and certain uses such as in aviation, navigation, and rail transport. Additionally, energy products sold in the country are subject to various taxes such as the Hydrocarbon tax, Tax on Electricity, or Tax on Coal, subject to the energy product in question. The tax on diesel fuel used in farming is partially refunded.
* The above charts are based on an arithmetic sum of the individual support measures identified in the Inventory. Because they focus on budgetary costs and revenue foregone, the estimates for partner economies do not reflect the totality of support provided by means of artificially lower domestic prices. Particular caution should therefore be exercised when comparing these estimates to those reported by the IEA for these countries. Data for 2019 are provisional.
The chief source of support to fossil-fuel production was the financial assistance to the country’s hard-coal mining industry. Under that scheme, the government compensated coal companies by covering the difference between their high operating costs and the prices at which coal was sold to local power plants, with mandatory purchase volumes set by the government. In the aftermath of the economic crisis of 2008-09, the Spanish Government sought to cut support to coal-mining companies by 63% and move away from state assistance by 2019.
The Spanish government announced its compliance with EU regulations (Decision 2010/787/UE) about coal mines by the end of 2018. The Government obtained a deal in October 2018 with mining unions to invest EUR 250 million over the 2019-2027 period for the alternative development of coal mining regions and funding packages aimed at transitioning affected regions towards environmentally sustainable industries. In January 2019, state aid to failing coal mines ended with the last operating coal mine set to close by end of 2021.