Rewriting for Clarity: Friday’s Wholesale Electricity Price and Policy Context

The current wholesale electricity price and its Friday trajectory

On Friday, the wholesale electricity price is expected to rebound, rising about 6.39% from yesterday and surpassing the 190 euro per megawatt hour (MWh) mark.

Data from the Iberian Energy Market Operator (OMIE) indicate an average price of 194.35 euro per MWh for Friday, representing an increase of 11.68 euros compared with Thursday’s 182.67 euro/MWh.

The highest hourly price for Friday, June 10, is projected to occur between 21:00 and 22:00 at 220.46 euro/MWh, while the daily low is anticipated between 04:00 and 05:00 at 168.92 euro/MWh.

Compared with a year earlier, the Friday average price is about 132% higher than the 83.84 euro/MWh recorded on June 10, 2021.

Pool prices have a direct bearing on the regulated tariff, known as PVPC, which covers roughly 11 million households in the country and serves as a benchmark for the 17 million customers on the free market.

In 2021, the National Markets and Competition Commission (CNMC) noted that around 1.25 million people shifted from PVPC to a fixed-price free-market rate, amid the energy upside scenario.

The best way to save on electricity bills without sacrificing comfort

GAS CAP: 600 MILLION MORE EXPENSIVE IN SPAIN THAN PORTUGAL

On May 14, the Official State Gazette (BOE) published a Royal Decree establishing a mechanism to cap gas prices for electricity generation at an average of 48.8 MWh for a twelve‑month window, targeting the upcoming winter when energy costs tend to be higher.

Although issued as a Royal Decree, the mechanism awaits formal approval from Brussels and is expected to be enacted by a ministerial order.

The government’s calculations indicate a discount cap for the average PVPC electricity consumer of about 15.3% during the 12 months following the cap’s implementation for gas-fired generation. This assessment is drawn from a legislative decree cited by Europa Press.

For industrial users exposed directly to spot prices, the government anticipates improvements in bills ranging roughly from 18% to 20% in the first month, with reductions tapering to 13%–15% in subsequent periods.

Teresa Ribera, the minister responsible for the Ecological Transition and Demographic Challenge, acknowledged some uncertainty in precisely forecasting the price decline once the gas cap is in effect but emphasized expectations of a 15%–20% improvement overall.

Under the cap, Spain and Portugal share the measure, and estimates point to higher costs in Spain by about 600 million euros relative to Portugal to implement the mechanism, according to industry sources consulted by Europa Press.

The explanation lies in how the extension of electricity futures contracts, along with sector nuances, shapes capacity and pricing dynamics over time.

Why separating electricity prices from gas matters

The electricity price calculator lets users tap any device to see its price per kilowatt hour (kWh).

Stability since the onset of the conflict in Ukraine

When the Russian invasion of Ukraine began on February 24, wholesale prices stood at 205.6 euro/MWh. Since then, there has been a trend of daily movements, with a peak on March 8 reaching a record 544.98 euro/MWh.

From March 12 onward, the wholesale price hovered around 250 euro/MWh but has fallen in recent days to below 230 euro/MWh.

March marked a historic peak in prices

The market’s February start and the ongoing conflict pushed March into a record month, with the average wholesale price in March reaching around 283.30 euro/MWh, a level that stood out against the December 2021 benchmark.

What the new electricity tariff means

Wholesalers exert direct influence on the PVPC, the regulated tariff that covers roughly 11 million consumers in the country and acts as a reference for the 17 million others on the open market.

The Ukraine-Russia conflict has implications for energy costs in the weeks ahead, particularly with gas, as European imports from Russia face potential slowdowns due to sanctions.

To cushion the impact on households, the government extended the tax relief on electricity bills through June 30.

The overall price trend is driven by higher international energy costs and the value of gas used in combined-cycle plants, which largely determines market prices and the cost of CO2 emission rights.

How to reduce electricity bills by more than 500 euros per year

To soften the rise in prices, the government continued the tax relief on electricity bills for the first four months.

The broader energy price rise is linked to international market pressures and the gas used in gas-fired plants, with CO2 rights contributing to price dynamics in many hours.

The ongoing conflict between the two nations could push energy costs higher in the coming weeks, especially for gas, as European imports face disruptions amid sanctions.

The year 2021 as a historic milestone for electricity costs

The year 2021 closed with exceptionally high prices, driven by a severe upward spiral in the pool. The daily market average reached 201.72 euro/MWh in January, a substantial increase year over year, though not as high as December 2021 figures.

The government extended the electricity tax relief through April 30, including a VAT reduction from 21% to 10% and a special electricity tax cut from 5.11% to 0.5%, with the production tax suspension for companies remaining in effect only through March 31 for now.