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ENERGY

Spain and Portugal present their ‘energy island’ plan for cutting electricity costs

Spain and Portugal on Thursday sent Brussels their joint proposal for lowering electricity prices in the Iberian peninsula to a maximum of €30 ($33) per megawatt hour, Spain’s ecology minister said.

Spain and Portugal present their 'energy island' plan for cutting electricity costs
Spain's Prime Minister Pedro Sanchez (L) and Portugal's Prime Minister Antonio Costa speak ahead of a meeting as part of a European Union (EU) summit at EU Headquarters in Brussels on March 25th, 2022. (Photo by JOHN THYS / AFP)

The move came a week after the European Union agreed that Spain and Portugal could deviate from the bloc’s rules on energy pricing to ease the impact of energy prices on consumers.

Spain and Portugal are in a strategically advantageous position in that they’re not as dependent on Russian natural gas as many of their European neighbours, importing most of it from Algeria and other countries.

Spain is also the country with the largest gas storage and regasification capacity in Europe and together with Portugal is a renewable energy leader in terms of solar, hydraulic and wind power. Their energy markets are more self-sufficient and extremely well connected between both nations.

This has led the two countries that form the Iberian peninsula (as well as tiny Andorra) to be referred to as an “energy island” by Spanish Prime Minister Pedro Sánchez and his Portuguese counterpart António Costa, as a simplified way of describing why their countries should be temporarily released from the EU’s common market rules.

The decision to grant Spain and Portugal “special treatment” came after their efforts to convince Brussels to decouple electricity prices from the gas market fell on deaf ears.

“We have a joint proposal… and we’re working with the European Commission” to push it through, Teresa Ribera told reporters.

The proposal involves capping the price of gas used for the generation of electricity to the equivalent of “€30 ($33)” per megawatt hour, she said.

Such a cap, which would significantly reduce the price of electricity on the wholesale market in both countries, “is one of the technical elements of the proposal we need to discuss with Brussels”, she said.

Prices are particularly high in the Iberian peninsula, with both Spain and Portugal heavily dependent on gas to produce electricity.

Prices have risen sharply in both countries in recent months due to the rules governing Europe’s electricity market which obliges producers to sell electricity on the wholesale markets at a price determined by the most expensive production costs — that of gas-fired power plants.

READ ALSO: Is Spain ready to be the EU’s main natural gas supplier?

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BRITONS IN SPAIN

Can British people in Spain claim the UK’s winter fuel payment?

In the UK, there are various benefits available to help eligible people through the cold winter months – one of which is the winter fuel payment. But can Britons living in Spain claim this benefit to cover the cost of heating their Spanish homes?

Can British people in Spain claim the UK's winter fuel payment?

Energy costs are on the up in Spain, and with the winter fast approaching the added cost of paying for heating when the mercury drops can result in some very high bills.

Not all of Spain has freezing winters but there are often cold spells and many houses in the country tend to get even colder than it is outside.

READ MORE: Why are Spanish homes so cold?

The average winter temperature across Spain is 8C (1981 to 2010 average). That’s higher than the average in other European countries, but in Spain’s interior and mountainous areas it can be truly chilly from November to March.  

That means that overall, there’s a chance you’ll need to use a radiator or the central heating to keep your Spanish home warm.

So are some of the 400,000+ UK nationals who reside in Spain eligible for winter fuel financial support from the UK?

What is the UK’s winter fuel payment?

The UK’s winter fuel payment is a tax-free payment to help older people with heating costs during the cold winter months.

Those eligible must have been born before September 26th 1956, according to the UK government website.

How much people receive depends on their age and whether anyone else in the household is also eligible, but the amount is usually between £250 and £600.

I’m a UK national living in Spain. Can I claim the winter fuel payment?

The UK government states that those living abroad can benefit from the winter fuel payment if:

  • You moved to an eligible country before 1st January 2021
  • You were born before September 26th 1956
  • You have a genuine and sufficient link to the UK – this can include having lived or worked in the UK, and having family in the UK

While many EU nations are on the list of eligible countries, such as Austria, Germany, Sweden, and Italy, unfortunately Spain is not on the list.

This means that if you live in Spain, you will not be able to claim the winter fuel payment at all, even if you meet the age conditions.

Why isn’t Spain on the eligible list of countries?

The UK government services website nidirect states that “you cannot get the payment if you live in Cyprus, France, Gibraltar, Greece, Malta, Portugal or Spain because the average winter temperature is higher than the warmest region of the UK”.

This is despite the fact that some parts of Spain are a lot colder than the average UK winter temperatures. This includes cities, towns and villages near mountain ranges such as the Pyrenees or Sierra Nevada, or regions in the interior like Castilla-La Mancha, Aragón​​ and Castilla y León.

According to the British government, during winter the average temperature is between 2 and 7 C in the UK.

READ ALSO: Where are the coldest places in Spain?

Foreigners in Spain used to be able to claim this financial benefit, but it was scrapped in 2015 after many UK taxpayers were angry that UK winter fuel payments were going to help people that lived in countries that were generally warmer than the UK.

READ ALSO: Which UK benefits can Brits keep if they move to Spain?

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