Spain is becoming the focus of increasing concern as its hydroelectric capacity suffers under an extended bout of dry weather. The extended drought has forced Spain to increase its thermal generation, pushing its carbon dioxide emissions higher.
The news comes as carbon prices reached record levels before plunging by nearly a third as preliminary data revealed that France, the Netherlands, the Czech Republic and Estonia announced actual emissions in 2005 of less than the amount of allowances allocated to the market.
Spain was revealed to be less short of allowances than was previously estimated, given that it has increased the use of fossil fuel-fired plant over the last year to replace a significant deficit in hydroelectric generation.
The news comes as Spanish grid operator REE reportedly called for an even split between hydro power, other renewables, nuclear power, coal and gas in Spain generation portfolio. REE director Alberto Carbajo reportedly said at an industry conference that such measures would avoid price spikes in the power market due to external factors.