2023-11-04 15:05:21
Los electricity prices now they sink and set downward records. The wholesale electricity market – in which electricity and traders they buy and sell the energy that will be consumed the next day – has been setting very low prices all week and increasing the number of hours that it sets prices of zero euros.
The average daily price of electricity in the market, which serves as a reference for the more than 8 million homes that have a regulated electricity rate, remains this Sunday at 5.03 euros per megawatt hour (MWh), in line with the levels recorded throughout the week and above the 1.51 euros per MWh that was set for this Saturday (the lowest level in almost three years), according to provisional data from the Iberian Market Operator of the Electricity (OMIE).
But the most striking thing is that during Sunday they will accumulate 16 hours straight electricity at zero euros (from 1:00 a.m. to 6:00 p.m.), the highest number of hours to zero in almost a decade. And there have not been so many hours recorded with zero price since February 8, 2014, when a total of 17 hours were accumulated, as highlighted Francisco Valverdeconsultant specialized in energy.
There has only been two days in the history of Spain in which the electrical market marked zero price throughout the day consecutively, the March 29 and April 1, 2013, in the middle of Holy Week that year. But then the evolution of the wholesale market did not have a direct impact on consumers’ bills, given that on that date the electricity price of the regulated electricity rate was set through special auctions that were held every three months and set the price. for the entire quarter.
More renewable, cheaper
The electricity market, also known as pool, sets prices through a marginalist system, which makes the latest and most expensive technology necessary to cover demand set the price of all the others every hour of the day. Some so-called inframarginal generation technologies (the renewablenuclear and hydroelectric) enter the market at zero price, so when the production of these energies is sufficient to cover all the planned consumption the price remains at those zero euros.
That’s what he’s been spending several hours almost every day this week. So far this year, there have been zero euros in the electricity market in 85 hours and there are hundreds of hours in which prices below one euro have been recorded. The confluence of moments of lower demand and the increasing weight of renewable energies in the electricity production mix in Spain are causing these episodes to be repeated with greater frequency. The hours at zero price are concentrated on weekends and holidays due to lower electricity consumption.
During this week, renewable energies have at times concentrated more than 70% of all electricity production, also coinciding with the shutdown of several nuclear power plants. He pool has been marking historically low prices all week thanks to the record of wind energy production due to the Ciarán storm that has hit a large part of the country and now due to Domingos, and also due to the strong contribution of photovoltaic and hydraulic energy.
Zero euros is not free electricity
That the electricity market collapses to zero euros does not mean that consumers have free electricity on their bill. On the one hand, because the evolution of the wholesale electricity market only has a direct impact on the bills of the more than 8 million customers who have contracted the regulated tariff, called voluntary price for small consumers (PVPC). On the other hand, because the price of energy is only one of the components that make up the bill of all clients, both those who have a regulated rate and the majority who have opted for a free market rate (whose price is freely set by the electricity companies). ).
In addition to the energy component, the bill also includes specific taxes (now reduced or temporarily suspended by the Government as part of the anti-crisis social shield); the regulated charges, which are set by the Government and which serve to pay the remuneration of renewables, the extra costs of the extra-peninsular territories or the debt of the electrical system; and access tolls, established by the National Markets and Competition Commission (CNMC) and which are used to finance the costs of transport and distribution networks. The energy part of the price may be at zero, but customers must continue paying for the rest of the components.
Respite for 8 million homes
The evolution of the price of the wholesale electricity market directly conditions the bill of the 8.5 million households that have contracted the regulated electricity tariff, called the voluntary price for small consumers (PVPC). The cost of compensation paid to electricity companies with gas plants for the cap of the Iberian exception should be added to the electricity market price, but since the mechanism has been inactive since last February (because the price of gas is below of the fixed ceiling) the cost of that adjustment is now zero.
The Government has approved a reform of the regulated tariff to reduce its volatility by linking the formation of its price not only to the daily electricity market, but also to other relatively more stable long-term electricity markets. A reform that will come into force in January 2024 and that will increase each year the weight that the long-term evolution of the markets has in the final price.
Last year, the electricity market set record prices in the midst of the energy crisis and suffered extreme volatility exacerbated by the economic impact of Russia’s military invasion of Ukraine. For months there were exorbitant increases and historical price highs, with until then unimaginable prices above 500 euros per MWh in the daily market and with hourly records of up to 700 euros per MWh.
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