BusinessAugust closes as the month with the most expensive electricity price in history, with 307.8 euros/MWh

August closes as the month with the most expensive electricity price in history, with 307.8 euros/MWh


The average price of electricity for regulated rate customers linked to the wholesale market registered its highest level for a month in history in August, with an average of 307.8 euros per megawatt hour (MWh).

Specifically, the average price of the daily wholesale market, the so-called ‘pool’, rose to 154.89 euros/MWh in the month, 46.2% higher than the average price of August last year.

To this figure must be added the daily average compensation for gas adjustment, as a result of the application of the cap on the price of gas used by thermal power plants, which stood at 152.91 euros/MWh in the month, according to data from the Association of Companies with Large Energy Consumption (AEGE).

The difference up to the gas price set in Mibgas has to be financed by consumers who are exposed to the OMIE daily market price.

In this way, this total figure of 307.8 euros/MWh stands as the highest price in a month for regulated rate customers linked to the wholesale market, exceeding the 283.3 euros/MWh on average registered by the ‘pool ‘ last March, when the ‘Iberian exception’ was not yet in force.

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This spiral of high electricity prices in August, especially in the last two weeks, has been driven by the price of natural gas, which is at record levels, mainly due to Gazprom’s announcement to cut from this 31 August and for three days pumping gas to Germany.

In this context, the French energy supply company Engie has reported that Gazprom has reduced its gas supply since Tuesday, which had already fallen substantially since the start of the war in Ukraine due to disagreement between the parties in the application of some contracts.

However, in the absence of the ‘Iberian exception’ mechanism to cap the price of gas for electricity generation, the price of electricity in Spain would have stood at an average of 376.7 euros/MWh in this month of August , which would have meant almost 69 euros more and 18.3% more on average compared to the 307.75 euros/MWh applying the cap to gas.

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On June 15, the ‘Iberian mechanism’ came into force, which limits the price of gas for electricity generation to an average of 48.8 euros per MWh over a period of twelve months, thus covering the coming winter, a period in which that energy prices are more expensive.

Specifically, the ‘Iberian exception’ sets a path for natural gas for electricity generation at 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 .

The Government estimates that the ‘Iberian exception’ has meant a saving of 1,383 million euros for Spanish consumers in its first two months of validity. This figure represents a saving of 22 million euros per day for Spanish society since the entry into force of the mechanism.

As regards the year as a whole, the Spanish electro-intensive industry estimates that, considering the measures approved in its Statute, and the compensation of the gas adjustment, the price at the end of the year in Spain will be 287.30 euros/MWh, about 89 euros/MWh more expensive than the French price, which is 198.26 euros/MWh.

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Considering the evolution of the daily market in 2022 and the future price quotes until the end of the year, the estimated average price of the ‘pool’ will be 212.03 euros/MWh, 90.2% higher than that of 2021, according to data of AEGE.

This figure is 49.3% lower than that of the German market and 64.6% cheaper than the French market, although the association highlights that the large industry in France and Germany buys its electricity with more competitive contracts than the price of its electricity markets. Thus, in France they enjoy the ARENH rate, at 42 euros/MWh.

For its part, the price of the future for 2023 of the Spanish electricity market as of August 30 was 351 euros/MWh, 66.4% more expensive than a month ago, and 53.8% lower than the market price German.

Source: Europa Press


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