The most expensive year in its history, the light is on at minimum

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Lower electricity prices and lower fuel price increases caused the CPI to drop for the fifth consecutive time. In December, it stands at 5.8%, according to Statistics. This is his lowest number since November 2021.

Most worrying is that core inflation, which excludes food and energy, climbed to 6.9%, well above the general index. Still very high prices that the Spaniards notice, above all, in the food.

The relief for the pockets is brought by the price of electricity

Tomorrow we will pay for electricity, the last day of the year, at one euro and eighty cents on the regulated market. And all because of warm temperatures and greater wind power generation which, if they continue like this, could mean that in the the next few days, the price will continue to fall.

The most convulsive exercise in its history

The wholesale price of electricity in Spain, which serves as a benchmark for customers with a regulated tariff or PVPC, says goodbye to the annual lows of this 2022, the busiest year in its history, which has led to an energy policy agreed between the European partners.

The 1.82 euros/megawatt hour (MWh) which will be paid this New Year’s Eve are only the exception of a year in which the “pool” closed with an average price of 210.2 euros/MWh, i.e. 88% more expensive than the 112 euros/MWh close to 2021, in due to various factors, including the war in Ukraine and high temperatures.

This year 2022 has intensified the upward trend recorded in the wholesale markets since the previous year, when the high gas prices on the international markets on which it is listed and the increase in the cost of CO2 emission rights pushed them to unusually high levels.

The invasion of Ukraine has contributed to this, which since its first attacks on February 24 has met with an almost unanimous response from the European Union – and the West – in the form of sanctions against Russia, origin of 40% of the gas consumed in the region.

This provoked a rapid reaction from the Kremlin, which in March threatened Brussels with an embargo on natural gas transported by the Nord Stream 1 gas pipeline, further increasing the volatility of this raw material.

In this context, on March 8, the “pool” in Spain broke its record, 383.67 euros/MWh of December 23, 2021, and reached a maximum still valid today, 544.98 euros/MWh, multiplying by more nine the amount of just one year ago.

Iberian mechanism

That month, the MWh exceeded 300 euros in eight sessions; Moreover, on the 7th, it reached 442.54 euros, and the On March 9, the 472.97 euros.

In the midst of a debate on energy sovereignty, Spain – which was demanding a reform of the electricity market in Brussels – and Portugal managed to get the Twenty-Seven to grant them the status of “energy island”.

The low level of interconnection with the rest of the European Union and the high rate of renewable energies, together with a much lower dependence on Russian gas compared to countries such as Germany, have opened the door for them to the negotiation of a temporary mechanism to limit gas contagion on the electricity bill.

After months of talks, the “Iberian exception”which caps the price of this raw material for the production of electricity, began to roll in session on June 14, with an average price of €225.22/MWh for the next day.

The final amount was now fixed both by the auction and by the new regularization to be paid by the beneficiaries to compensate the power stations which use gas to produce electricity.

Despite the hesitant start of the mechanism, which the PP has come to call an “Iberian scam” to supposedly finance cheaper gas for France, the relief became more noticeable in July.

Taking into account the auction and the adjustment, the 300 euros/MWh was exceeded in seven days, but without the cap, it would have been exceeded in twenty.

combined cycles

Combined cycles have become the protagonists of this month of August, the month with the the most expensive electricity in historyat 308 euros/MWh on average, according to data prepared by EFE.

And it is that the heat waves that have crossed the Iberian Peninsula, the lack of wind, the haze and the drought have negatively affected the production of renewable energy, the least expensive technology, in summer.

So the threshold of 400 euros it was exceeded in five days, with the MWh at 450.85 euros on August 24; at 400.9 euros, on the 27th; at 426 euros, on the 29th; at 475 euros, on the 30th, and at 486.21 euros, on the 31st.

However, if the “Iberian exception” had not been included, the average price on these same dates would have fluctuated between 533.46 and 492.19 euros.

After a month of September marked by suspicions of sabotage due to Nord Stream leaks, prices moderated in October, falling below 80 euros/MWh for the first time in a year.

Cheaper still was November, the cheapest month of the year, with electricity at 124.43 euros/MWh on average, lower than December, when MWh returned to its early 2021 levels thanks to a fee annual minimum daily rate of 1.82 euros.

Last month’s average price, nearly 136 euros/MWh, was around 43% lower in annual comparison, given the evolution of this last part of the rrenewable, with wind and photovoltaic way to pulverize their highs.

Europe

The cumulative average price of electricity in Spain was around 210.2 euros/MWh, around 25 euros below what it would have been without the turn off the gas

If we only take into account the months with the “Iberian exception” in force -which will last until May 31, 2023-, the amount would be around 209 euros/MWh, adjustment included, compared to 254.76 euros to those who would climb without The mechanism.

According to the government, the measure saved more than 4,000 million euros for the Spaniard in his first six months.

These prices are lower than those of other neighboring countries, in particular Italy, which, dragged down by the strong dependence of its economy on gas, paid 740.1 euros per MWh on August 29.

A day later, France, which saw nearly half of its nuclear fleet shut down for various reasons, rose to 743.84 euros/MWh, while Germany fell by nearly 700 euros on August 26.

Since the entry into force of the “Iberian exception”, the MWh is paid on average in Italy at 355 euros; in France, at 320 euros, and in Germany, at 282.4 euros.

Despite the vote against Hungary and abstentions from Netherlands and Austria, The European Union has undertaken, specifically, to establish a price cap for gas imports at 180 euros/MWh in wholesale futures contracts from 15 February.


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