The average price of the wholesale electricity market is going to break a new annual maximum this Saturday, rising by 7.5% compared to Friday and standing at 366.5 euros per megawatt hour (MWh). It is the second highest price in the historical series, close to 383 euros/MWh on December 23, and occurs in a context of strong increases in natural gas due to the war in Ukraine.
The most expensive hour will be 8:00 p.m., with just over 409 euros/MWh, slightly below the most expensive hour this Friday. At 8:00 p.m. on March 4, the MWh will be paid at 410 euros, a figure that is unprecedented.
And the explanation lies in the war that has broken out in the heart of Europe. This Friday, the price of TTF gas, a reference in the old continent, is still close to historical highs, above 180 euros/MWh, after tonight’s Russian attack on the largest nuclear power plant in Europe, the Energodar plant , in the Zaporizhia region, which has set off all the alarms in the international community.
The outbreak of the conflict already led to electricity futures last week pointing to a month of March with wholesale prices still higher than those of last December, and the most pessimistic forecasts are being fulfilled. In the last three days, the MWh has not fallen below 300 euros on a daily average, a level that had only been reached at the end of 2021.
Each increase in the price of gas implies a rise of about two euros in the price of the so-called pool, whose design Spain is demanding to change before the EU to try to deindex it from gas. Since the Russian invasion of Ukraine, the price of gas, along with other raw materials, has skyrocketed. Russia is the main supplier of gas to the EU, with close to 40%, and in recent days there has been growing concern about the effects of a cut in the supply of this raw material from Russian territory.
The European Commission has postponed until next week the presentation of a new package of measures available to the Member States as a result of the war in Ukraine. The Government of Spain has been asking for months for solutions to deindex the price of gas from the price of electricity and support for this emergency solution is growing. And last Wednesday, the President of the Government, Pedro Sánchez, announced the extension, until June 30, of the current tax reductions on electricity, additional discounts on the social bonus and aid for industrial consumers.
The prices of the ‘pool’ have a direct impact on the regulated rate –the so-called PVPC–, to which almost 11 million consumers in the country are covered, and serve as a reference for the other 17 million who have contracted their supply in the free market.