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Spain power reforms will 'crush' steel: Unesid

Keywords: Tags  Spain, steel industry, power reform, power costs, subsidies, Unesid, energy market, European Union Jose Manuel Soria

LONDON — Spain’s newly instituted power reforms will be devastating for the future of the country’s steel industry, according to Spanish steel association Unesid.

The reforms, which were introduced in mid-July, will reduce subsidies for renewable energy generation and electricity, and will cost utility companies in Spain as much as 2.7 billion euros ($3.6 billion) and consumers €900 million ($1.2 billion), according to Spanish Industry Minister Jose Manuel Soria.

The reforms are part of the new Spanish government’s efforts to eliminate the energy industry’s deficit, Soria said.

Spanish Economy Minister Luis de Guindos described the reforms as "absolutely unavoidable for the sake of guaranteeing consumer protection in Spain." However, Unesid said that negative effects have already been seen.

"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," Unesid said.

The European Commission, which presented its Steel Action Plan on June 11, said that affordable energy costs are essential to the preservation of the European Union 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."

A version of this article was first published in AMM sister publication Steel First.

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