Gas drops from €90 per MWh for the first time in nearly two months
Electricity pricing in the wholesale market is a key part of what households and businesses pay on their energy bills. In Spain and Portugal, about nine million customers are on the regulated market, known as the Voluntary Price for Small Consumers (PVPC), while the rest have fixed price agreements with their suppliers. Recent movements show that PVPC customers were hit hardest by price shifts driven by global energy dynamics and supply gaps, with significant volatility observed this year due to the war in Ukraine and its ripple effects on gas and power markets.
Today’s numbers reflect a broader trend in which wholesale electricity costs interact with taxes and regulated charges to shape final bills. The wholesale component can swing dramatically, but taxes—such as value-added tax, tariffs, and the special electricity tax—along with transmission and distribution costs and other levies, can either amplify or cushion hourly price variations. In late trading hours, the wholesale price has sometimes dipped below zero, yet the overall bill remains influenced by these supplementary charges.
Over the past weeks, the average wholesale price per megawatt-hour has shown notable movement. From mid-December onward, averages around 49 euros have contrasted with higher monthly averages as the month progressed, reflecting a mix of robust renewable and nuclear generation that keeps output high while demand shifts with milder weather. Across Europe, prices have followed similar patterns, with countries like Germany reporting negative prices and France reporting modest gains, while Italy shows markedly higher levels.
There is historical context to consider. Sub-zero daily averages for Spain would mark a milestone in the Iberian price framework. Previously, zero was the regulatory floor, but updates to align with broader European market practices opened room for negative or very low prices under certain conditions. This reform, introduced through the Iberian Market Operator (OMIE), aimed to harmonize the Iberian market with European norms and to reflect real-time supply and demand more accurately. The change has sparked debate—yet it coincides with periods of falling prices and rising plant efficiency across renewables and other generating sources.
During some hours, price caps and other operational rules can influence how gains and losses are distributed among market participants. For instance, during peak or off-peak windows, the system may run into limits that affect the level of compensation; gas-fired generation may adjust outputs in response to price signals, and cross-border exchanges with neighboring countries can shift marginal costs. The Iberian market has introduced a temporary mechanism to manage price patterns, evolving through phases with monthly adjustments as supply contracts and generation mixes shift toward balance.
Looking ahead, the price envelope will continue to respond to fuel costs, plant availability, and weather-driven demand. If the trend toward high renewable penetration persists, combined with stable or cooler temperatures that moderate energy use, wholesale prices could stay subdued. Conversely, any disruption to gas supply or a spike in demand could push prices higher. Analysts emphasize monitoring hourly price trajectories as well as the cumulative daily average to gauge the true cost impact on bills.
In sum, the Iberian energy market has moved toward greater price flexibility, with occasional negative pricing moments and gradual adjustments that reflect both local policies and European energy dynamics. The ongoing evolution aims to balance affordability with the need to support investment in clean generation, grid reliability, and cross-border cooperation that keeps the system resilient amid changing global energy conditions.
Sources: Iberian Market Operator (OMIE) reports and national regulatory updates provide the basis for these observations, illustrating how wholesale pricing interacts with taxes and regulated costs to shape the final energy bill across households and businesses in the region.