The latest trend in wholesale electricity prices and what it means for consumers
The wholesale electricity price is set to rise by 6.7% on Tuesday compared with Monday, crossing the 210 euro per MWh mark as authorities prepare to implement the Iberian exemption that will shield the gas costs for electricity generation from Wednesday onward. (Source: OMIE data, reported by Europa).
In concrete numbers, Tuesday’s average price is projected at 214.05 euro/MWh, which is 13.43 euro higher than Monday’s 200.62 euro/MWh. (Source: OMIE data, Europa).
For Tuesday, the daily high and low prices illustrate fluctuations within the day, with the peak hitting around 242.27 euro/MWh and a low near 194 euro/MWh during the 10:00 to 23:00 window. (Source: OMIE data, Europa).
Compared with the same day last year, the average price on Tuesday this week is about 141.9% higher than that year’s 88.47 euro/MWh on June 14, 2021. (Source: OMIE data, Europa).
Pooled pool prices influence the regulated tariff, PVPC, which covers roughly 11 million households and also serves as a benchmark for the 17 million consumers who shop in the free market. (Source: CNMC).
In 2021, the National Markets and Competition Commission noted that around 1.25 million people switched from PVPC to a fixed-price free-market rate amid an upward energy trend. (Source: CNMC).
In mid-May, the Official State Gazette issued a Royal Decree establishing a mechanism to cap gas prices for electricity generation at an average of 48.8 euros per MWh over a year, addressing energy costs for the upcoming winter. (Source: BOE).
Brussels gave the mechanism formal approval last week, and its implementation was endorsed by the Ecological Transition ministry. (Source: European authorities).
The best way to save on an electricity bill without sacrificing comfort
FROM JUNE 15
The Iberian exemption takes effect starting with the next electricity market auction on Tuesday, June 14, influencing the market matching on Wednesday, June 15. (Source: government calculations).
The government estimates the discount will cap the PVPC-regulated rate for typical consumers at about 15.3% over the following 12 months after the cap for gas-fired generation begins. (Source: Europa Press).
For industrial users who face spot prices, the government projects a reduction of roughly 18% to 20% in the first month, with continued decreases of about 13% to 15% in subsequent periods. (Source: government calculations).
What does it mean to separate electricity prices from gas costs?
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Click any device in the calculator to view the price per kWh for that appliance. (Tool description).
STABILITY IN THE MARKET
On February 24, the start of the conflict in Ukraine, wholesale prices stood at 205.6 euro/MWh. Since then, prices rose daily, peaking on March 8 at a record 544.98 euro/MWh. (Source: historical market data).
From March 12 onward, prices hovered around 250 euro/MWh, then gradually declined over the following days to fall below 230 euro/MWh. (Source: historical market data).
MARCH: A historically costly month
Initially, February 24 marked the entry into a period of sustained price increases, culminating in a March record of 544.98 euro/MWh. The average price in March hovered around 283.30 euro/MWh, with early March figures exceeding the December 2021 average by about 55 euro per MWh, underscoring a historic pricing phase. (Source: market records).
Understanding the new electricity tariff
Wholesalers directly influence the PVPC, the regulated tariff covering about 11 million Spanish consumers, while also serving as a benchmark for the 17 million who contract supplies on the open market. (Source: energy market overview).
The ongoing Ukraine-Russia conflict adds pressure on energy prices, particularly for gas, as European reliance on gas imports faces potential disruption due to sanctions. (Source: energy market analysis).
To cushion the impact of rising prices, the government extended relief measures on electricity taxes until June 30. (Source: government policy documents).
Rising prices across Europe are driven by higher international energy costs and the increased price of CO2 emission rights, which influence the market price in most hours. (Source: market analysis).
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To soften the rise, the government extended the VAT reduction on electricity bills and kept other relief measures in place for a defined period. (Source: government policy documents).
The broader energy context includes elevated international prices and gas costs tied to the use of gas in combined-cycle plants, alongside CO2 rights influencing hourly prices. (Source: energy market context).
The geopolitical situation between Russia and Ukraine continues to influence energy outlooks, especially gas imports to Europe, as sanctions and supply dynamics shape future pricing. (Source: energy market analysis).
MARCH 2021: A record year for electricity costs
The year 2021 concluded with exceptionally high electricity prices, driven by market dynamics in the second half of the year. Daily market averages hovered around 111.93 euro/MWh for the year, while early 2021 saw higher daily averages compared with the previous year. (Source: historical data).
At the turn of the year, the government extended the tax relief on electricity bills to all consumers until early next year, including reductions in VAT and electricity taxes, with some production tax suspensions limited to specific dates. (Source: policy records).