The wholesale electricity price is set to average 220 euros per megawatt hour (MWh), down 3.78% from Wednesday to Thursday.
Specifically, the pool price for Thursday, a public holiday, will average 220.76 euro/MWh, about 8.68 euros lower than yesterday’s 229.44 euro/MWh (data from the Iberian Energy Market Operator and reported by Europa Press).
Throughout the day, the highest price is expected between 21:00 and 22:00 at 272.31 euro/MWh, while the lowest point, 190 euro/MWh, should occur between 17:00 and 18:00.
Compared with a year ago, the pool price for Thursday is projected to be 198.5 percent higher than the 73.96 euro/MWh recorded on April 14, 2021.
Pool prices influence the regulated PVPC rate, which covers roughly 11 million households and also serves as a benchmark for the remaining 17 million customers who choose supply in the free market.
The National Markets and Competition Commission (CNMC) noted that in 2021 around 1.25 million people switched from PVPC to a fixed-price free market plan, amid the ongoing upward trend in energy costs.
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PRECAUTIONS WHEN THE PLUG IS CHEAP
On 29 March, a government plan to mitigate the war’s impact includes extending the electricity tax cut until 30 June and extending the electricity social tariff to reach 1.9 million households.
Additionally, an early and temporary update to the renewable energy, cogeneration, and waste fee regime (Recore) was adopted, resulting in an 1,800 million euro cut in electricity bill fees.
Another government measure keeps the gas discount in place until 30 June to reduce extraordinary profits in the electricity market, expanding coverage to energy with futures priced at or above 67 euro/MWh.
Spain and Portugal have submitted a preliminary proposal to the European Commission to set a gas reference price of 30 euro per MWh to alleviate electricity costs.
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STABILITY SINCE STABILITY
When Russia invaded Ukraine on February 24, the wholesale price stood at 205.6 euro/MWh and has risen daily, peaking on March 8 at 544.98 euro/MWh. Since March 12, prices have hovered around 250 euro/MWh and have trended lower in the past five days, dipping under 230 euro/MWh.
March is projected to be the most expensive month in history. The average wholesale price for March was about 283.30 euro/MWh, with a year-to-date figure around 239 euro/MWh, surpassing the December 2021 average by roughly 55 euro/MWh.
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Wholesalers directly influence the PVPC, which covers about 11 million consumers in Spain and acts as a reference for the 17 million others contracting supply on the open market.
The conflict in Ukraine and Russia may push energy prices higher in the coming weeks, particularly for gas, as European Union sanctions affect Russian imports.
To ease the impact on consumers, the government extended the electricity bill tax cut to June 30.
Rising prices across Europe are driven by high international market costs and the increased value of gas used in combined-cycle plants, which helps set market prices for most hours, together with CO2 emission rights.
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To soften the rise in electricity costs for households, the government extended the tax cut on electricity bill taxes through the first four months. The wider price trend across Europe is driven by international market costs and gas prices used in power plants, along with CO2 rights.
The ongoing conflict between the two large energy suppliers could push prices higher in the near term, especially for gas, as European imports from Russia face potential slowdowns under sanctions.
2021 became the most expensive year in electricity history
The year 2021 closed with record highs due to the pool’s surge in the latter half, averaging 111.93 euro/MWh. Early 2021 also showed elevated daily prices, with January averaging 201.72 euro/MWh, about 235.3 percent higher than the same month a year earlier and 15.7 percent below December 2021.
The government extended the reduction of some electricity taxes through April 30 to cushion the impact on consumers. VAT was reduced from 21% to 10%, the special electricity tax was cut from 5.11% to 0.5%, and the production tax suspension for companies remained in effect only through March 31 for now.