Iberdrola sees Spanish gas clawback extended into 2024

Spanish utility Iberdrola believes the country's temporary gas price clawback mechanism for emissions-free generation could be extended into 2024 and has forward-sold its estimated renewables output out to 2025 at prices just below the scheme's €67/MWh cap.

Iberdrola has hedged 100pc of its estimated price-driven output for 2022, 90pc for 2023, 70pc for 2024 and 55pc for 2025, all at similar average prices of €65-70/MWh, it disclosed this week as it unveiled its three-year business plan for 2023-25.

Queried by Argus, the utility today said it is assuming the gas clawback for both 2023 and 2024, while for 2025 wholesale prices would be "normalised" and drop to levels in the €70s/MWh, as indicated by forward markets.

The Spanish government last month extended the gas price clawback mechanism by a year to December 2023. Under the scheme, companies must return 90pc of alleged excess revenues derived from the impact of high gas prices on wholesale electricity values if their generation comes from emissions-free sources — mostly renewables and nuclear. Generation hedged with fixed forward prices is exempt, but only at prices of below €67/MWh.

Iberdrola told Argus that it has hedged only its renewable output so far. Retail margin is added to the €65-70/MWh prices to reach final end-customer prices, it said.

Locking in its renewable output at these wholesale price levels will make it exempt from the gas clawback, the utility confirmed today.

Even though the Spanish government has not said whether it intends to extend the clawback further, Iberdrola is now the second major Iberian power utility to unveil forward sales prices within the €67/MWh cap beyond 2023. Utility Endesa early this week said it had sold forward almost half of its expected 2024 price-driven output at an average of €65/MWh, the same average price of its forward sales for 2022 and 2023.

The Spanish calendar year 2023 contract closed at €194/MWh on 10 November, down by €6.95/MWh from 9 November and its lowest since 10 October, according to Argus daily assessments. The contract has averaged €203.36/MWh so far in the fourth quarter.

Calendar year 2024 has averaged €122.75/MWh over the same period, ranging from €104-157/MWh, although it reached as high as €203.75/MWh at the end of August, driven by record-high gas prices.

And the calendar year 2025 contract has traded in a range of €80.00-95.75/MWh so far this quarter, up from €70.50-83.00/MWh over June-September.

Iberdrola forecasts average Spanish wholesale power prices of €200/MWh in 2022, €196/MWh in 2023, €170/MWh in 2024 and €74/MWh in 2025, it disclosed this week.

By Juan Weik