The average electricity price for customers on regulated tariffs who access the wholesale market is set to rise by 30.9% this Saturday compared with Friday, reaching €287.05 per megawatt hour (MWh). This figure reflects the combined effect of the wholesale market auction and the compensation paid to gas-fired plants under the Iberian mechanism designed to cap gas costs for electricity generation.
At auction, the wholesale market price, often called the pool, averaged €169.11/MWh for Saturday. The highest price is expected between 22:00 and 23:00 at €230/MWh, while the lowest level for the day is projected between 17:00 and 18:00 at €120/MWh.
On top of the pool price, an additional €117.94/MWh is added as compensation to gas companies. This amount is financed through charges to consumers benefiting from the measure, including those on regulated tariffs (PVPC) and others on indexed rates who are still within the free market framework.
Even with the increase recorded on Saturday, demand tends to ease over the weekend. The rise in electricity costs coincides with high gas price pressures seen in Europe, where the TTF benchmark in the Netherlands trades around €246/MWh on Friday.
In parallel, the Iberian stock market for natural gas traded at €162.95/MWh on Friday, marking a more than 3% rebound from the previous day.
25% less
Without the Iberian mechanism to cap gas prices for electricity generation, Spain’s average electricity price would be around €382.32/MWh, roughly €95.27/MWh higher than the compensated tariff level. The current mechanism thus yields a noticeable saving for consumers, estimated at about 24.9% on average.
The Iberian mechanism, which started on 15 June, sets the price of natural gas for electricity generation at an average of €48.8/MWh over a twelve-month horizon to cushion energy bills in the coming winter when prices tend to rise.
Specifically, it maps out a path for the Iberian exception, aiming for gas to contribute around €40/MWh to electricity generation in the initial six months, followed by a gradual monthly increase of €5/MWh through the end of the measure.
Teresa Ribera, the Third Vice-President of the Government and Minister for Ecological Transition and Demographic Challenge, has estimated that the Iberian exemption saves money for Spanish consumers during the two-month validity period. The figure cited is €1,383 million in savings, with a daily impact of about €22 million for society since the mechanism began.
Ribera noted that these savings translate into tangible relief for households and businesses alike as they help mitigate the volatility of gas and electricity markets in the short term.