The wholesale electricity price is set to rise by 6.7 percent on Tuesday compared with Monday, reaching 210 €/MWh. Applications are anticipated from Wednesday as the Iberian mechanism aims to cap natural gas costs used for electricity generation.
Specifically, the average price on Tuesday is forecast at 214.05 euro per MWh, indicating an increase of 13.43 euros from the prior day when prices averaged 200.62 euro per MWh, according to data from the Iberian Energy Market Operator OMIE and reported by Europa Press.
The day’s high is expected to reach 242.27 euro per MWh between 22:00 and 23:00, while the lowest price of the day should be 194 euro per MWh, recorded between 16:00 and 17:00.
Compared with a year earlier, the average on Tuesday will be markedly higher, up by about 141.9 percent from 88.47 euro per MWh on 14 June 2021, illustrating a sharp rise in wholesale costs over the year. The term pool prices directly influence the regulated PVPC tariff or price protected by the market and service some 11 million households. They also serve as a reference for the remaining 17 million customers who buy in the free market.
In 2021, the National Markets and Competition Commission noted an uptick in customers moving from PVPC to a fixed-price option in the free market, a shift that highlighted the impact of wholesale dynamics on household bills.
In mid-May, the Official State Gazette published a royal decree introducing a limiting mechanism for gas prices used in electricity generation. The cap targets an average of 48.8 euros per megawatt hour over a twelve-month period, aiming to shield consumers during the upcoming winter when energy prices tend to be higher. The measure received formal approval from Brussels and was endorsed by an order from the Ecological Transition ministry, marking a pivotal step in stabilizing prices for households and industry alike.
From 15 June, the Iberian exception will come into effect following the auction for electricity. This mechanism will influence wholesale price formation on the day the auction is held and will apply the next day, impacting the price setting for Wednesday, 15 June.
When calculating the impact, the government says the discount for the average electricity consumer covered by the PVPC will be 15.3 percent during the twelve-month implementation of the cap on electricity generation from natural gas, as outlined in the accompanying impact report. Analysts have noted that the measure aims to smooth the transition for households during the peak season and safeguard essential usage.
For industrial customers fully exposed to spot prices, the government’s guidance indicates a discount between 18 and 20 percent, with estimates varying from 15 to 17 percent in the initial month and between 13 and 15 percent in the final month of the scheme. This variance reflects the evolving nature of the price cap as the mechanism runs its course and market conditions shift.