Average wholesale electricity on Thursday is set to rise by about 2% from yesterday, climbing above 210 euros per megawatt hour (MWh) and reaching its highest level since late April.
Data from the Iberian Energy Market Operator (OMIE) indicate an average price of 214.74 euro per MWh for Thursday, roughly 4.29 euros higher than the prior day’s 210.45 euro/MWh.
The day’s peak price is forecast at 256.46 euro/MWh from 22:00 to 23:00, while the minimum is expected to be 171.85 euro/MWh between 16:00 and 17:00.
Compared with a year ago, the Thursday average is about 153% higher than 84.85 euro/MWh on 2 June 2021.
Pool prices influence the regulated PVPC rate, which covers around 11 million households and serves as a benchmark for the other 17 million customers who buy in the free market.
In 2021 the National Markets and Competition Commission (CNMC) noted that about 1.25 million people switched from PVPC to a fixed-price rate in the free market, part of the energy price surge observed then.
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GAS CAP: 600 MILLION MORE EXPENSIVE IN SPAIN THAN PORTUGAL
On 14 May, the Official State Gazette (BOE) published a Royal Decree establishing a mechanism to cap gas-based electricity generation at an average of 48.8 euro/MWh over 12 months, targeting the upcoming winter when prices usually rise.
Although issued as a Royal Decree, the measure awaits formal Brussels approval and will be implemented by ministerial order.
The government calculation limits the discount for the average PVPC consumer to about 15.3% during the 12 months after the cap applies to gas-fired generation. This summary comes from legislation accessed by Europa Press.
For industrial customers exposed to spot prices, the government forecasts an 18%–20% reduction in bills, with estimates of 15%–17% in the first month and 13%–15% in the following period.
Teresa Ribera, Minister for the Ecological Transition and Demographic Challenge, acknowledged some uncertainty in the exact impact of the gas cap, but the government expects a 15%–20% cut on average.
Under the cap, Spain would see higher costs than Portugal to implement the mechanism, according to industry estimates cited by Europa Press.
This stems from how Spain’s electricity futures extend into the future, affecting how sector resources are managed.
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STABILITY SINCE STABILITY
After the 24 February invasion of Ukraine, wholesale prices began at 205.6 euro/MWh. A steady rise led to a peak on 8 March of 544.98 euro/MWh.
As of 12 March, the wholesale price hovered around 250 euro/MWh, with a gradual retreat to below 230 euro in the most recent days.
MARCH: THE MOST EXPENSIVE MONTH IN HISTORY
With the invasion on 24 February, prices surged from 205.6 euro/MWh, pushing the March average to about 283.30 euro/MWh. By contrast, December 2021 had set a high benchmark, making March 2022 notably costly.
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Wholesale prices shape the PVPC, the regulated tariff covering about 11 million consumers and serving as a reference for the 17 million who buy through the free market.
The Ukraine–Russia conflict could push energy prices higher in the weeks ahead, particularly for gas, as European imports face potential slowdowns from sanctions.
To cushion the impact on households, the government extended a tax reduction on electricity bills through 30 June.
Rising prices in Europe reflect higher international costs and the value of gas used in combined-cycle plants, which influences market prices across most hours and CO2 emission rights.
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To soften the rise in prices, the government renewed the electricity tax relief for the first four months.
Higher global energy costs and gas prices for power plants help explain the market shifts, alongside CO2 emission rights dynamics.
The Ukraine–Russia conflict could continue to push energy costs up in the near term, with gas imports potentially hampered by sanctions.
2021: the year with record electricity costs
The year closed at historically high levels. The daily market average reached around 201.72 euro/MWh in January, with notable increases compared with the previous year, and lingering effects into December 2021.
The government extended tax relief on electricity bills through the end of April to help households. In particular, VAT remained reduced from 21% to 10%, the electricity tax fell to the legal minimum of 0.5%, and the production tax for companies stayed suspended for a limited period.