Almost 88 Euro/MWh more than France
The wholesale market price for regulated electricity customers reached an average of 243.55 euros per megawatt hour in September, a one month peak that still sits nearly 21 percent below the August high of 307.75 euro per MWh. The daily market average, referred to as the pool, climbed to 141.07 euro per MWh this month, which is 9.7 percent lower than September’s average a year earlier.
AEGE, the association representing large energy users, notes that the price of gas used by thermal plants reflects the gas adjustment tied to the monthly gas price ceiling of 102.48 euro per MWh. When wholesale gas prices diverge from this fixed ceiling, the difference is funded by consumers who face the daily market fluctuations, as managed by OMIE.
According to AEGE, the pool price of 141.07 euro per MWh is 59.2 percent below the German market and 64.3 percent lower than the French market. Compared with August 2022, the September average was 8.9 percent lower.
Looking ahead, analysts estimate the Spanish electricity market will average around 178.50 euro per MWh by year end, a figure that would be roughly 60 percent cheaper than 2021, and notably lower than both the German and French markets. AEGE notes that large industries in France and Germany do not always face the same price pressures as those in Spain, benefiting from favorable contracts and the ARENH mechanism in France, which allows a capped price of around 42 euro per MWh.
Price gap versus France remains sizable
In the first eight months of the year, prices in Germany and France were higher than in Spain. For energy-intensive industries, Spain is projected to see around 251.53 euro per MWh by year end after accounting for regulatory measures and gas compensation. This would still be about 87.61 euro per MWh higher than the French price, creating a gap of roughly 163.92 euro per MWh.
Forecasts for 2023 as of late September show an average of about 203.25 euro per MWh in Spain, indicating a 42.1 percent drop from the prior month and a 59.5 percent decrease from the previous year in comparison with the German market.
Prices rise on a Saturday flash
On a recent Saturday, the regulated rate wholesale price rose by 12.2 percent to reach 171.8 euro per MWh, up from the prior day, according to provisional data from the Iberian Energy Market Operator and sourced by Europa Press. The figure reflects the combination of the wholesale pool price and the additional compensation paid to gas-fired plants under the Iberian exemption to limit gas costs for electricity generation.
During the auction, the average pool price stood at 116.09 euro per MWh, with the day’s maximum at 218.65 euro per MWh between 21:00 and 22:00. The minimum of 72.72 euro per MWh occurred between 15:00 and 16:00. An additional 55.71 euro per MWh in gas compensation was added to the pool price, benefiting consumers on regulated rates or those with indexed tariffs who are exposed to market fluctuations.
Current outlook and Iberian mechanism impact
Without the Iberian exemption that caps gas costs for electricity generation, Spain would see an average price near 190.22 euro per MWh. The Iberian mechanism, which began mid June, sets an average gas price for power generation near 48.8 euro per MWh over a 12 month period, helping to shield winter electricity costs. The mechanism details a gas price path starting at around 40 euro per MWh in the first six months and increasing by five euro per MWh each month thereafter.
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