BarcelonaWhen the new electricity bill came into force on June 1, 2021 – just over a year ago – everyone was left with a maxim: at night, electricity is cheaper. Consumer organizations advised turning on high-consumption appliances at night, such as washing machines, dryers, and dishwashers, or ironing clothes at night.
In fact, the intention of the Spanish government when it launched this model was to divert consumption from peak hours to hours with less demand, a way to be more efficient in electricity consumption and, above all, not to have to increase generation. and investing beyond what was needed in networks to be able to cope with high consumption peaks.
But then came the post-covid recovery and, above all, the war in Ukraine, which have raised the price of electricity to historic highs. Spain – together with Portugal – started the so-called Iberian exception in the European Union, which allows a cap on the price of gas used to generate electricity in combined cycles. In return, energy companies should receive compensation.
This system has completely reversed the hourly price curve for electricity in the wholesale market. Light is no longer cheaper at night: on the contrary, gas compensation means that night and morning accumulate the most expensive hours. Because? Joaquim Daura, vice-president of the Efficient Energy Cluster of Catalonia (CEEC), explains. “At night there is no sun; therefore, it is not generated by photovoltaics, and it usually makes less wind, which drops wind generation,” he says. The result is that the combined gas cycles have to come into operation and, as a result, the compensation goes up to the power plants, which end up being paid by the users.
In contrast, currently at noon and early afternoon is when electricity is cheaper. This is due to the fact that it is the strip of the day with the most solar production, which reduces the need for gas. And this causes a second effect: the compensation for the gas peak is low and is distributed among more.
The change in the price of light
Average data in € / MWh per hour from Monday to Friday in the second week of July 2021 and 2022
Average data in € / MWh per hour on the second weekend of July 2021 and 2022
Indeed, at night not only increases the economic compensation to be received by the combined cycles by the cap on the price of gas, but by lowering the demand the compensation is divided between fewer users and increases its impact, explains an expert in the sector electric.
When the Spanish government proposed the new bill model that came into force on June 1, 2021, it played with tolls and charges to make the gap between the most expensive and the cheapest hours. Thus, the bill establishes three levels of toll: that of the valley hours (cheaper), from 24 h to 8 h and all weekend; the flat hours (intermediate cost), from 8 am to 10 am, from 2 pm to 6 pm, and from 10 pm to midnight; and the peak hours (the most expensive), from 10 a.m. to 2 p.m. and from 6 p.m. to 10 p.m.
Lower weight of tolls
The effect that these different tolls have on the receipt, which encouraged them to make large consumption at night and on weekends, has now disappeared due to two factors: on the one hand, light has become so expensive that the price of toll is proportionally much lower. On the other hand, the compensation for the use of gas eats away at the discount that the cheapest tolls could provide.
Does this change in the price of electricity affect everyone? Not exactly. It basically affects customers who are in the regulated market (the so-called PVPC), as they have the price tied to the hourly wholesale market; but it also affects a portion of free market customers, those who have a receipt indexed to the wholesale market. On the other hand, it does not affect free market customers who have agreed fixed prices or fees, explains a billing expert.
The market is now “a roller coaster in which, in addition, you are changed lanes,” says an expert in the sector, who indicates that the adjustment for the gas cap makes the light more expensive at night, especially on weekends. And that doesn’t just affect home users. Some companies also suffer from this, for example steel, which has its production ready at night because that is when electricity was traditionally cheaper. These electro-intensive companies, if they did not have fixed-term contracts and bought electricity from the wholesale market, now produce when energy is more expensive.