Wind power’s greater contribution to the generation mix means lighting the oven or Christmas decorations is practically free this Saturday
It almost seems like a lie. After more than a year and a half with a completely disrupted electricity market, we Spaniards will say goodbye at the end of January 2021 to the last day of 2022 with the price of electricity at its lowest. wholesale market they will be zero euros. That is, completely free of charge, a situation that, according to historical data, has not occurred since March 2014.
According to data from the electricity market operator Omie, the average price of electricity for customers covered by the regulated tariff (PVPC) will be EUR 2.65 per megawatt hour (MWh) on Saturday, a figure that drops to EUR 1.82 per MWh with the amount of compensation to the gas companies (0.83 euros). At five o’clock in the afternoon it will barely exceed the euro per MWh. For the New Year’s Eve dinner, it is therefore useful to turn on the oven a few hours earlier, because from seven o’clock in the evening the maximum price of the day is registered, at only 20 euros per MW/h.
Behind the price drop in recent days is the greater contribution of wind energy to the energy generation mix. But the fact that the price on the wholesale market reaches zero the next morning does not mean that electricity is completely free for consumers.
It should be taken into account that the invoice not only affects the auction price, but also other fixed costs such as taxes and tolls. Free market customers also do not benefit from this situation, as their price is the price agreed with the electricity company at the time of the contract.
Despite this, this abrupt turnaround is surprising in a market that has been going through almost unusual months. Specifically, the average price for regulated tariff customers connected to the wholesale market this year exceeds 209 euros, the most expensive since records existed and almost double the 112 euros recorded on average in 2021. It should be remembered that August was the month with the highest prices in the entire historical series, with the average over the period approaching EUR 310 per MW/h.
Without the “Iberian exception mechanism” to limit the price of gas for electricity generation, the price of electricity in Spain would average around €40.41/MWh, which is about €38.6/MWh more than with the compensation for customers of the regulated rate, paying an average of 95.5% less.
The ‘Iberian Mechanism’, which entered into force on 15 June, limits the price of gas for electricity generation to an average of EUR 48.8 per MWh for a period of 12 months and thus covers the coming winter, a period in which energy prices will be higher. are expensive.
In concrete terms, the ‘Iberian exception’ sets a path for natural gas for electricity generation starting at a price of €40/MWh in the first six months, and then a monthly increase of €5/MWh until the end of the measure.
Source: La Verdad
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
