The electricity price is set to drop sharply this Friday, with a projected price as low as 5.47 Euro per megawatt hour (MWh). This would mark the lowest level seen since February 2021, reflecting results from the wholesale market auction and the adjustment tied to the gas price ceiling beneficiaries.
Without the Iberian price-limiting mechanism for natural gas used in power generation, tomorrow’s wholesale rate would hover around 50.5 Euro/MWh, approximately 45 euros higher. This assessment comes from data published by the Iberian Electricity Market Operator (OMIE) and the Iberian Gas Market (Mibgas).
The final average price emerges after applying a temporary adjustment of 6.02 Euro/MWh recorded in the wholesale market for this Friday. This adjustment is charged to gas-ceiling users to compensate factories that rely on gas for electricity production. The adjustment can be negative, as seen on occasion, and will again be negative on Friday.
At 5.47 Euro/MWh, the price represents the lowest since early 2021. The year has seen a gradual rebound in economic activity and a steady rise in electricity costs following the coronavirus pandemic.
According to data compiled by EFE, the threshold around 10 Euro/MWh slipped by as much as six times between late January and late February last year. On January 30 the MWh average was 4.19 euros; January 31 showed 1.42 euros; February 8 recorded 8.3 euros; February 9 logged 7.1 euros; February 20 posted 2.19 euros; and February 21 stood at 5.67 euros, a range that is surprisingly close to this Friday’s pace.
New annual minimum
The market has posted a fresh annual minimum after Christmas Day, when electricity prices hovered around 10.63 euro/MWh.
Independent time bands, excluding the adjustment, indicate the electricity price will peak during the 19:00 to 20:00 window, where it would be paid at 21.78 Euro/MWh. Conversely, the interval from 04:00 to 05:00 would see the MWh priced at 0.57 Euro.
Electricity costs this week are roughly one thousand liras lower than the same day last year, when the price hovered near 140.8 Euro/MWh and the Iberian mechanism had not yet been put in place.
Across the Old Continent, price environments remain subdued for most major economies, with notable exceptions. Italy stands out with an average around 179.51 euros per MWh on December 30. Germany and France show around 14.63 and 18.48 Euro/MWh, respectively, with Portugal mirroring Spain due to shared market rules and the Iberian mechanism. In the United Kingdom, prices are near 62.8 pounds per MWh, roughly 71 euros depending on the exchange rate.