Friday, September 30

The price of electricity chains its second day at maximums since March despite the cap on gas

The price of electricity chains its second consecutive day at maximums since March. For this Wednesday, the average price of electricity for regulated rate customers linked to the wholesale market will return, with a rise of 19.4% compared to this Tuesday, to stand at 436.25 euros per megawatt hour (MWh) , thus registering a new maximum since the entry into force of the gas cap, according to provisional data from the Iberian Energy Market Operator (OMIE), according to Europa Press.

The gas cap protects Spain from more electricity records with prices 35% lower than in France

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This price is the result of adding the average of the auction in the wholesale market to the compensation that the demand will pay to the combined cycle plants for the application of the ‘Iberian exception’ to cap the price of gas for the generation of electricity. In this way, the price of electricity paid by the beneficiaries of the ‘Iberian exception’ will register a new maximum level this Wednesday, the second in a row after today’s 365.33 euros/MWh, since it came into force in mid-June the mechanism.

In the auction, the average price of electricity in the wholesale market -the so-called ‘pool’- has been located for this Wednesday at 186.95 euros/MWh. The maximum price will be registered between 10:00 p.m. and 11:00 p.m., with 236.79 euros/MWh, while the minimum for the day, of 140.07 euros/MWh, will be between 5:00 p.m. and 6:00 p.m.

To this price of the ‘pool’ is added the compensation of 249.3 euros/MWh to the gas companies that has to be paid by the consumers who benefit from the measure, the consumers of the regulated rate (PVPC) or those who, despite being in the free market, they have an indexed rate.

This increase in the cost of electricity occurs with TTF gas price levels in the Netherlands, a reference in the European market, at maximum levels, mainly driven by Gazprom’s announcement to cut from August 31 and for three days of gas pumping to Germany. This Tuesday the MWh of natural gas was trading below 270 euros, after this Monday they appeared at 290 euros.

15% less than without applying the Iberian solution

In the absence of the ‘Iberian exception’ mechanism to limit the price of gas for the generation of electricity, the price of electricity in Spain would be on average around 502.11 euros/MWh, which is around 65.86 euros/MWh more than with the compensation for clients of the regulated rate, who will thus pay 15% less on average.

The electricity market prices for this Wednesday in the rest of the European countries are also showing maximum levels. In the case of France it is above 645 euros/MWh, while in Germany it exceeds 624 euros/MWh and in Belgium it exceeds 611 euros/MWh.

The ‘Iberian mechanism’, which came into force on June 15, limits the price of gas for electricity generation to an average of 48.8 euros per MWh over a period of twelve months, thus covering the coming winter, a period in which which energy prices are more expensive.

Specifically, the ‘Iberian exception’ sets a path for natural gas for electricity generation at a price of 40 euros/MWh in the initial six months, and subsequently, a monthly increase of five euros/MWh until the end of the measure .

The third vice president of the Government and minister for the Ecological Transition and the Demographic Challenge, Teresa Ribera, estimated last week that the ‘Iberian exception’ has meant a saving of 1,383 million euros for Spanish consumers in its two months of validity. Ribera indicated that this figure represents a saving of 22 million euros per day for Spanish society since the entry into force of the mechanism.