The price of electricity collapses this Friday by 66%

The average price of electricity for regulated rate customers linked to the wholesale market will drop this Friday by 66.13% compared to Thursday and will stand at 5.47 euros per megawatt hour (MWh), which represents the lowest level since February 20, 2021, when it stood at 2.02 euros/MWh. It will be the fourth lowest price since the beginning of last year, behind the 1.42 euros/MWh of January 31, 2021, the 2.02 euros/MWh of February 20, 2021, and the 4.19 euros/ MWh on January 30, 2021.

In the auction, the average price of light in the wholesale market for this Friday stands at 6.02 euros/MWh. The minimum price, of 0.57 euros/MWH, will be given between four and five in the morning, while the maximum price will be registered between seven and eight in the afternoon, with 21.78 euros/MWh, according to provisional data from the Iberian Energy Market Operator (OMIE).

more wind

The price of electricity falls thanks to the high wind energy production in recent days, after having fallen in the past, also as a result of the abundant rains that made hydroelectric production cheaper. As the weather forecast is for the winds to continue, the price of electricity will probably remain low for the rest of the week.

The final average price is the result of applying to the pool price the provisional adjustment that the beneficiaries of the gas cap have to pay (consumers of the regulated rate or those who, being in the free market, have a rate indexed to the wholesale market) to compensate the plants that use this material to generate electricity, which will be -0.55 euros megawatt hour. If there were no cap on the price of gas to generate electricity – called the ‘Iberian exception’ – the price of electricity in Spain would be on average around 50.53 euros/MWh, that is, around 45 euros higher. The ‘Iberian mechanism’, which came into force on June 15, limits the price of gas for electricity generation to an average of 48.8 euros per MWh for a period of twelve months, thus covering next winter, a period in which energy prices are more expensive.

This mechanism was approved after the price of light reached a maximum of 700 euros per megawatt hour in March of this year. Despite the measure, the price of electricity has skyrocketed for much of the year, The ‘Iberian exception’ sets a path for natural gas for electricity generation from a price of 40 euros/MWh in the initial six months, and subsequently, a monthly increase of five euros/MWh until the end of the measure.

On June 15, the so-called ‘gas cap’ became effective, with which both in Spain and Portugal the price of gas for electricity generation is limited. This causes there to be a result for the average price of the daily ‘pool’ (wholesale market) to which must be added the daily compensation for gas plants.