The average wholesale electricity price, a key reference for consumers with regulated tariffs or PVPC, has surpassed 90 euros per megawatt hour (MWh) in August, marking the costliest month in almost a year. This surge in the pool price coincided with prolonged heatwaves and high temperatures, yet no new demand record was reached. As a result, the reduced 10 percent VAT will continue to appear on September bills for the third consecutive month.
The MWh ended August at an average of 91.05 euros, up 26 percent from July, which until now had been the second most expensive month this year after January. These 91.05 euros per MWh are nearly seven times higher than the 13.67 euros observed in April, historically the lowest wholesale price since market operations began in 1998. Still, year over year the electricity price shows about a 5 percent decline.
August stands as the month with the highest average pool price of the year, exceeding January’s 74.09 euros per MWh and even October’s 90.13. There is no record higher since September 2023 when prices hit 103.62 euros. Looking at the latest auctions, the MWh has shattered the daily annual maximum thanks to a peak of 120.37 euros on Thursday, the 29th. It is set to approach that level again this Saturday at 116.61 euros, the second highest price of 2024.
The pool has surpassed 100 euros per MWh on several more occasions. The lowest price occurred on Sunday the 25th at 31.2 euros, meaning there has not been a session below 10 euros for two consecutive months after July broke a long-running pattern since January.
Zero prices during sun hours
During these weeks there were again moments of negative prices in the pool, down to -0.95 euros between 11:00 and 12:00 on Sunday the 25th. More common, however, were zero euros during the central part of the day between 10:00 and 17:00. This confirms a trend warned by experts since July that solar radiation hours are cheaper than a year ago.
In theory this sets a counterbalance against extreme temperature events that push demand higher as households run cooling systems more. Yet August’s heat waves did not visibly alter electricity demand.
The peak for this summer period, spanning June through September, remains the 36,184 MW recorded at 14:41 on July 30. These figures stay behind the 2024 high of 38,272 MW on January 9 at 20:56, as reported by the system operator. They also lag the historical high of 45,450 MW set at 18:53 on December 17, 2007.
Solar photovoltaic power continues to lead the generation mix for the fourth month in a row, accounting for 24.3 percent of the total according to the daily Spanish peninsular electrical system data up to this Friday. Nuclear generation follows at 23.1 percent, with wind at 16.7 percent. Gas-fired cycles, more expensive to run and used to support high demand, contribute 12.5 percent, edging up slightly from July as hydro declines.
Another month with reduced VAT
The wholesale price trajectory means the next electricity bill will carry a 10 percent VAT rate. The government fixed this reduced rate for the year, with one exception: if a month’s average pool price failed to exceed 45 euros per MWh, the tax would rise in the next month to 21 percent.
This exception occurred in March, April, May, and June after months when the MWh price closed below 45 euros. Forecasts suggest the pool will stay above that threshold. OMIP electricity futures point to 90.15 euros in September, 89.25 for the last quarter, and around 79 euros for 2025.