The light reaches maximums, filling the car’s tank costs 20 euros more than in March and even the butane cylinder is more expensive than any summer. In full operation after a year and a half in lockdown due to the pandemic and with skyrocketing temperatures calling for air conditioning at all hours, Spanish homes and consumers are forced to pay for the most expensive energy in history. The perfect energy storm hits the pocket of citizens.
This cyclogenesis of energy has caused the price of natural gas to become more expensive due to the explosion of Chinese demand and Russian restrictions, or the speculation of international investors triggers the market for carbon dioxide (CO2) rights, the rate with which the EU taxes fossil fuels to favor the adoption of renewables
It is already a custom that the Executive hides behind external factors to justify the price escalation and the opposition blames it for the failures of the Spanish energy model, a system designed based on patches of the different governments of PSOE and PP.
The electricity companies recall that there are unique factors in the Spanish market that derive from decisions that successive governments have adopted and that have nothing to do with international markets: the accelerated closure of nuclear and coal plants; the pricing system; the dependence on gas from Algeria, the lack of a sufficient electrical connection with France and, above all, an enthusiastic commitment to the rapid transition to renewable energy through a generous system of premiums to companies that, in the end, falls on the final consumer . None of these policies have been imposed by Brussels or by pressure from international markets. They were adopted to the lemon by the successive governments of the PP and the PSOE.
“Spain has wanted to be the first of the class in clean energy, but does not seem to want to assume the cost of this effort,” says the manager of an energy company, who recalls that countries such as Germany or Poland have reactivated their coal plants, without Count on the coal-fired macro plants commissioned by China in 2020 for 38.4 GW, which represents 76% of the world total (50.3 GW), according to the Global Energy Monitor (GEM). France, for its part, has increased the useful life of 32 nuclear reactors from 40 to 50 years, in a country where nuclear energy accounts for 77% of electricity consumption, and has 58 reactors.
In Spain, the commitment to renewables continues without lightening the bill. On the contrary, the average price of electricity in the wholesale market reached a new historical maximum last Wednesday, surpassing the level of 106 euros / MWh, pulverizing a historical record that dated from January 11, 2002.
The reason for this escalation is a combination of factors: the increase in gas prices and CO2 emission rights, the lower contribution of renewables in the energy mix used to set the price, the weather with the absence of winds that paralyzes the contribution of wind energy, and the increase in demand due to the heat wave.
However, this data must be put into context. The price of energy has a weight close to 24% in the bill, while around 55% corresponds to tolls – the cost of transmission and distribution networks – and charges – the premiums for renewables, the subsidy for the extra-peninsular ones and the tariff deficit—, and the rest are taxes.
In addition, fluctuations in the daily price affect consumers covered by the regulated tariff (PVPC), slightly more than 10 million, while those in the free market are exempt – about 17 million -, since they have a price agreed with your company.
At the end of spring the Government decided to lower taxes to alleviate the rising cost of electricity. But the rise in recent weeks has neutralized the emergency measure that the Government adopted on June 24 with the reduction of VAT on electricity from 21% to 10% until the end of this year for all consumers with contracted power up to 10 kilowatts and the suspension of the 7% tax on electricity generation for three months.
Despite these measures, the electricity bill of an average user has increased by 34.6% (21.7 euros more) in the first half of July compared to the same month last year, when the bill was at 62.67 euros, according to calculations by consumer associations.
The government now has a very narrow margin of maneuver. You can cut taxes further but at the cost of skyrocketing the deficit. The Minister of Ecological Transition, in statements to EL PAÍS, pointed rather to the need for Brussels to change the rules of the game, and modify the current marginalist system, which makes all the technologies (renewable and fossil) that enter into choose the price of the most expensive energy at any given time.
Ribera also admitted that CO2 rights, which were created to accelerate the transition to cleaner energies, have become a speculative market for investment funds. In fact, there is the paradox that the main speculators in that market are Chinese and US funds, the most polluting countries in the world.
As if that were not enough, consumers, accustomed to a drop in the price of the butane cylinder in the summer months, this year for the first time in a long time has increased. Exactly the traditional butane cylinder is now worth 15.37 euros, a rise that has not stopped since November 2020, accumulating an increase of 27%, the highest in the last six years.
According to OCU estimates, the increase in the price of energy will mean an average increase in the annual energy bill of households of up to 505 euros: 311 for gasoline from cars (250 if they use diesel), 55 for gas and 139 for electricity. As the saying goes, the last one to turn off the light.