Spain may extend interruptible power law amid industrial demand slump

Barcelona — Spain has opened the door to extending interruptible auctions into 2020 amid a slump in power demand form industrial users.

The deadline for applying to the mechanism has been extended to November 30 from August 31 for "consumers that wish to offer interruptible services from January 1, 2020," according to Spain's official State Gazette Wednesday.

While the extension ensures that Swiss Parter Capital, which concluded the purchase of two Spanish aluminum plantsfrom US group Alcoa last month, has the opportunity to participate in the mechanism, it also allows for it to be rolledover into next year.

With a temporary government in place for most of this year, legislation to replace the mechanism has not been approved.

The last auction, covering H2 2019, was intended to be the last one. Large industrial users have used the contracts as a means of saving on energy costs in return for reducing demand at times of high national consumption and/or when power price spike.

The extension comes amid a prolonged slowdown in industrial demand for power.

A monthly index published Thursday by grid operator Red Electrica showed power demand from large industry fell 4.2% year on year in July, the 15th successive monthly decline, weighed by declines from the metal and auto sectors.

While the overall figure was a small recovery from the 8.5% drop in Q2, the metals and autos sectors continued to underperform the index, with 12.6% and 11.6% annualized declines, respectively, in July.

The overall IRE index, which tracks demand from 21,500 Spanish consumers with a contracted capacity above 450 kW, was down 3.4% in July on year, with demand from the service sector down 1.3% over the period.

National demand was up 2.6% in July following five previous months of declines. Total demand was 24.3 TWh in the month, REE reported.

-- Gianluca Baratti, newsdesk@spglobal.com

-- Edited by James Burgess, james.burgess@spglobal.com