the price of electricity drops to zero euro

the price of electricity drops to zero euro

It almost seems like a lie. After more than a year and a half with a completely disrupted electricity market, we Spaniards will say goodbye on the last day of 2022 with the price of electricity at its lowest end of January 2021. In addition, at dawn, energy prices on the wholesale market will be at zero euros. That is to say completely free, a situation that has not occurred since March 2014 according to historical records.

In total, the price of electricity for customers covered by the regulated tariff (PVPC) it will drop to 1.82 euros per megawatt hour (MWh)depending on the prices set on the wholesale market (2.65 euros per MWh, according to the operator Omie) and the adjustment to be paid by the beneficiaries of the gas cap.

At five o’clock in the afternoon, it will barely exceed the euro per MWh. So It is practical to advance the ignition of the oven by a few hours for dinner on New Year’s Evesince from seven o’clock in the afternoon the maximum price of the day will be recorded, at only 20 euros per MWh.

Behind the drop in prices of the past few days lies the greatest contribution of wind power to the energy production mix. But that the price on the wholesale market reaches zero euros the next morning This does not actually imply that the electricity will be completely free to the consumer.

It must be taken into account that the invoice influences not only the auction price, but also other fixed costs such as taxes and tolls. Free market customers also do not benefit from this situation.since its price is that agreed with the electricity company at the time of the contract.

Despite this, this sharp turnaround is surprising in a market that has suffered almost unusual months. Specific, the average price for customers at the regulated tariff linked to the wholesale market exceeds 209 euros this yearthe most expensive since records exist and almost doubling the 112 euros recorded on average in 2021. It should be remembered that August was the month with the highest prices of the entire historical series, the average for the period approaching 310 euros per MWh.

Iberian exception

In the absence of the “Iberian exception” mechanism to cap the price of gas for electricity production, the price of electricity in Spain would be average of about 40.41 eurosi.e. approximately 38.6 euros per MWh more than with the compensation of regulated tariff customers, who will thus pay 95.5% less on average.

The “Iberian mechanism”, which entered into force on June 15limits the price of gas for the production of electricity to an average of 48.8 euros per MWh over a period of twelve monthsthus covering next winter, a period when energy prices are more expensive.

More specifically, the “Iberian exception” sets a trajectory for natural gas for electricity production starting from a price of 40 euros per MWh in the first six months, then, thereafter, a monthly increase of five euros MWh until the end of the measurement.

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