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The reforms will cut back subsidies for renewable energy generation and electricity. They were introduced in mid-July and will cost utility companies in Spain as much as €2.7 billion ($3.6 billion) and consumers €900 million ($1.2 billion), according to industry minister Jose Manuel Soria.
The reforms are part of the new Spanish government’s efforts to eliminate the energy industry’s deficit, Soria added.
While economy minister Luis de Guindos described the reforms as “absolutely unavoidable for the sake of guaranteeing consumer protection in Spain”, Unesid, which comprises and represents 46 steelmaking companies across Spain, said that negative effects have already been seen.
“The increase in the price of electricity in Spain is a major blow to the competitiveness of an industry that is forced [by market circumstances] to export as much as 70% of its production,” Unesid said.
“The representatives of the sector – which is the main industrial consumer of electricity – are not asking for subsidies, but rather energy prices that remain competitive next to those of other European countries,” it added.
On Tuesday June 11, the European Commission presented its Steel Action Plan, in which it said that affordable energy costs are essential to the preservation of the EU steel industry.
“The completion of the internal energy market and diversification of supply, as well as increased energy efficiency, will contribute to lower costs,” the commission said, adding that it was “willing to provide guidance on long-term electricity contracts between suppliers and customers to increase the predictability of such costs.”
“In the short term, reduction of energy costs for energy-intensive industry will depend on member states. The Commission is committed to working towards this goal,” the plan said.
Spanish steel association Unesid has said that newly instituted power reforms will be devastating for the future of the country’s steel industry.