Electricity prices in Iberia: friday rise, april bills and policy measures

The price of electricity on Friday is set to rise by around 8.4% from Thursday, exceeding 200 euros per megawatt hour (MWh).

For Friday, the average price in the wholesale market, known as the pool, is projected at 202.99 euro/MWh, roughly 16 euros above yesterday’s 187.27 euro/MWh. Data released by the Iberian Energy Market Operator (OMIE) confirms this level.

The minimum price for May 13’s 18:00 to 19:00 window is 164.99 euro/MWh, while the day’s maximum is forecast at 242.74 euro/MWh, expected during the 08:00 to 09:00 interval.

Compared with a year earlier, the Friday average is 239% higher, rising from 59.8 euro/MWh on May 13, 2021.

Pool prices influence the regulated tariff, known as PVPC, which covers roughly 11 million households and serves as a benchmark for the 17 million households that purchase energy on the free market. In 2021, the National Markets and Competition Commission (CNMC) noted that about 1.25 million people moved from PVPC to a fixed-price, free-market option as energy prices climbed.

BILL IN APRIL 53% HIGHER THAN A YEAR AGO

Facua-Consumers in Action reports that the average electricity bill for April reached 124.90 euros, the fifth-highest on record and about 53.2% above the 81.55 euros paid in the same month the previous year. Nevertheless, the April bill fell 29.3% from March, a month that saw a historic peak in wholesale prices exceeding 283 euro/MWh.

Back in April 2021, the price per kilowatt-hour averaged 17.04 cents (27.19% when indirect taxes are included).

The best way to save on electricity without sacrificing comfort

The Iberian market has seen a series of measures aimed at softening consumer costs. Earlier this week, the governments of Spain and Portugal reached an agreement with the European Commission to cap gas prices, targeting an average of 50 euros/MWh over the next twelve months in the Iberian wholesale electricity market.

As part of this framework, the initial gas reference price is set near 40 euros/MWh, while the long-run impact aims for an average of 50 euros/MWh. This arrangement is intended to balance energy affordability with market signals and is notably higher than the 30-euro ceiling initially proposed by Spain and Portugal.

On March 29, the government approved a national plan to address the effects of the war in Ukraine, including continuing tax relief on electricity bills until June 30 and extending the electricity social coupon to reach 1.9 million beneficiary households. An early update to the renewable energy, cogeneration and waste (Recore) regime included a 1.8 billion euro cut in electricity bill fees. Additional measures extended the gas reduction until June 30 to curb extraordinary profits in the electricity market, extending coverage to energy with futures and fixed-price contracts when the price exceeds 67 euro/MWh.

What does separating electricity price from gas mean?

Electricity pricing in the wholesale market often diverges from gas costs, yet both factors together shape consumer bills. An electricity price calculator on the platform lets users click any device in the calculator to reveal the price per kWh.

STABILITY SINCE THE START OF THE CONFLICT

On February 24, the price of wholesale electricity began a steady ascent after the start of the conflict in Ukraine. The market peaked on March 8 at 544.98 euro/MWh. Since March 12, prices have hovered around 250 euro/MWh but have declined in recent days to just under 230 euro/MWh.

MARCH: HISTORICALLY COSTLY MONTH

In late February, the wholesale price stood at 205.6 euro/MWh and surged in March, with a record daily peak at 544.98 euro/MWh. The average wholesale price for March was approximately 283.30 euro/MWh, about 55 euro above the December 2021 average, underscoring the year’s extreme costs.

New electricity tariff overview

Wholesalers influence the PVPC, the regulated tariff that covers around 11 million consumers in Spain and serves as a reference for the 17 million who purchase energy in the open market. The Ukraine-Russia conflict has the potential to push energy prices higher, particularly for gas, as imports to Europe face disruption. To ease the impact on households, the government extended the VAT reduction and electricity tax relief through April 30. The surge in European energy prices is driven by high global prices and CO2 emission rights, which affect electricity markets across many hours.

How to save more than 500 euro annually on electricity

Efforts to shield consumers include extending tax relief on electricity bills for four months. The elevated energy costs across Europe are influenced by international market conditions and gas costs used in power generation, alongside CO2 emission rights. The ongoing Ukraine conflict might push prices higher in the coming weeks, as European imports of Russian gas face potential slowdowns due to sanctions.

2021: The year with the highest electricity costs on record

The year finished with exceptionally high prices, driven by increased wholesale energy activity in the latter half of the year. In January, the daily average price stood around 201.72 euro/MWh, roughly 235.3% higher than the prior year’s January and about 15.7% lower than December 2021’s peak. The government continued to extend the electricity tax relief until April 30 to help all consumers manage rising costs. VAT reductions and other tax relief measures remained in place through the end of April, while some production-related taxes were temporarily paused for a limited period.