HE light price Increases accumulate throughout August. The wholesale electricity market, where electricity companies, distributors and traders buy and sell the energy that will be consumed the next day, has recorded chain increases in recent days and reached the highest levels of the last six months.
The wholesale market, also known as the ‘pool’ in the energy sector, left its mark on this Tuesday. Average price per megawatt hour (MWh) of 134.94 euros For electricity to be consumed this Wednesday, which according to provisional data from the Iberian Energy Market Operator (Omie) represents its highest price since the beginning of last March. According to the time periods, this Wednesday the maximum price will be 180.34 Euros per MWh and will be recorded between 21:00 and 22:00, while the minimum price will be recorded between 4:00 and 5:00. high 111.12 Euro/MWh.
The price of the ‘Pool’ is still far from its historic highs recorded in the worst of the energy crisis last year (reaching hitherto unimaginable maximums of over 500 Euros per MWh), but steady increases have been accumulating in recent days due to the recovery. greater weight of gas power plants due to lower contribution of electricity demand and wind power in the midst of another heat wave and hydroelectric power plants production due to drought.
“Now there are a number of factors that are causing the price of electricity to rise. “As the heat wave and people gradually return to work after the holidays, there is more electricity consumption, gas and CO2 rights have risen, and more is produced with gas plants because wind generation is lazy.” Francisco Valverde, analyst at Menta Energía consulting firm. “The thermal gap of the Spanish market [la parte de la demanda que hay que cubrir con energías térmicas] It’s still strong and pulls electricity down when the price of gas rises.”
gas rise
The heatwave that has hit Spain in the last few days, hitting its fourth this summer, has caused significant increases in electricity demand due to the extra air conditioning consumption. Electric companies and power systems manager—Red Eléctrica de España, REE—has rapidly increased the use of gas power plants, concentrating about one-fifth of all supply during the summer, arguing nuclear is the largest resource generation.
weight lately gas stations It has clearly positioned itself as the main source of production in the country, climbing between 25% and 30% of total national production. Coinciding with the increase in the prices of the natural gas market, a larger production (Spanish Mibgas is currently 40 euros per MWh, at the beginning of summer only 25 euros) as well as correct CO2 emissions (currently close to 90 euros per tonne).
Spain took the place of the so-called ‘Brussels’.Iberian exception‘, mechanism that imposes a limit on the price of gas used in electricity generation to lower the final price of electricity. The cap aims to ensure that the rest of the power generation technologies are not affected by gas price increases. In practice, the Iber solution has been inactive for six months because the gas market Mibgas is below the limit set by the mechanism. To reactivate the gas market, this August price must exceed €60 per MWh.
This is how the electricity market works
HE wholesale electricity market sets prices with a marginalist systemit puts its stamp on the price of all other watches at any time of the day, using the latest and most expensive technology necessary to meet demand. At a time when increases in gas and CO2 increase the price at which they offer their production in the electricity market, the increase in the production of gas power plants raises the cost of electricity.
On the other hand, some generation technologies called inframarginal renewable energy, nuclear and hydropower) enter the market at zero price, so when the production of these energies is sufficient to cover all expected consumption, the price remains at that zero euro, as it has been for more than 60 hours so far this year.
The evolution of the wholesale electricity market price directly affects the bills of 8.5 million households subject to a regulated electricity tariff called the price on demand for small consumers (PVPC). To the price of the electricity market must be added the cost of compensation paid to electricity companies with gas plants for the ceiling of the Iberian exemption, but the cost of this adjustment is now zero as the mechanism is not active.
The government approved tariff reform to reduce volatility by linking price formation not only to the daily electricity market but also to other relatively stable long-term electricity markets. A reform that will come into effect in 2024 and will increase the weight of the long-term development of the markets in the final price each year.