Friday, July 1

Electricity drops 16% this Sunday as demand falls and due to the lower use of gas

Electricity will drop this Sunday more than 16%, to 177.64 euros megawatt hour (MWh), according to the results of the auction held in the wholesale market or “pool” and the adjustment to be paid by the beneficiaries of the cap to gas to compensate the plants that use this material.

Considering these levels, it will be around 60 euros cheaper than the more than 240 euros that would have been paid per MWh in the Iberian Peninsula if there were no limit on the price of gas for electricity generation, which has entered up and running this week.

A series of factors have contributed to this, mainly the fall in electricity demand as a consequence, on the one hand, of the lower economic activity during the weekend and, on the other, of the stabilization of temperatures after the heat wave that has crossed Spain these days.

Both effects have already begun to be felt this Saturday, when the expected peak in electricity demand will barely exceed 35,000 megawatts (MW), although slightly above the records of just a week ago due to weather conditions, according to data from Red Eléctrica de España.

The downward trend in demand has also led to a change in the energy mix and a greater contribution from renewable technologies, especially solar photovoltaics.

This contrasts with the situation experienced in the middle of the week, when the combined cycle generated close to 40% of the electricity of the Spanish peninsular system, surpassing all that produced by hydro, wind, solar photovoltaic and solar thermal.

Although the operation of these plants, which use natural gas to generate electricity, entails an increase in prices, it guarantees the supply to homes and industry in extreme situations, avoiding possible collapses of the electrical system.

As is happening in Spain, the main European economies are witnessing a drop in pool prices, with the exception of Italy, where it will be at 256.38 euros/MWh.

On the contrary, the MWh will be paid tomorrow in the United Kingdom at 159.60 pounds (about 186 euros at the exchange rate), in France, at 165.43 euros, and in Germany, at 154.65 euros.

In Portugal, whose consumers also benefit from the cap on gas due to the so-called “Iberian exception”, the price will be at the same levels as in Spain as they share the market.

Auction and adjustment

If only the results of the auction in the wholesale market are taken into account, which until now set the price to be paid the following day, electricity will drop by an average of 16.3%, to 122.61 euros, compared to 146 .54 euros/MWh marked for this Saturday.

By time slots, the maximum will be recorded between 11:00 p.m. and 12:00 a.m., when 250 euros/MWh will be paid, while the minimum will be 50 euros/MWh, between 5:00 p.m. and 6:00 p.m.

However, to these amounts must be added the cost of adjusting the gas plants, the amount of which varies depending on the volume needed by the system and its price, and is passed on to households and beneficiary companies.

Applying this data, which the operator OMIE disseminates in the hour after determining the price of the “pool”, the MWh will fall 16.2% this Sunday compared to the 212.02 euros/MWh that it has cost -adjustment included- this Saturday .



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