Since reaching maximums last March, the price of electricity continues to trend downward. According to data from the Iberian Energy Market Operator (OMIE), the average price of electricity for customers of the regulated rate will plummet this Saturday by 51.1% compared to this Friday, to 55.98 euros per megawatt hour (MWh). This is the lowest level since June 2021.
In the wholesale market auction, the average price -the so-called ‘pool’- will stand tomorrow at 67.38 euros per megawatt hour. A price to which must be added compensation to gas users for the cap on gas, a temporary measure approved last May to avoid making the electricity bill more expensive.
The drop in electricity market prices is mainly due to a greater production of renewable energy, especially wind power, as well as the drop in demand -which is usually lower on weekends- and the drop in the price of electricity. gas in the Spanish market, due to lower demand caused by unusually high temperatures for this time of year.
The 55.98 euros/MWh of this Saturday represent the lowest level since the Iberian mechanism came into force, on June 15, and the lowest price for regulated tariff customers linked to the wholesale market since June 20, 2021, when the ‘pool’ marked 52.63 euros/MWh for that day.
In the absence of the ‘Iberian exception’ mechanism to cap the gas price, the price would stand on average at around 91.42 euros/MWh, which is around 35.4 euros/MWh more than with the compensation for customers of the regulated tariff, which they will pay with this formula an average of 38.76% less.
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.
Specifically, the ‘Iberian exception’ sets a path for natural gas for electricity generation from a price of 40 euros/MWh in the initial six months –until December 15–, and subsequently, a monthly increase of five euros/MWh until the end of the measure.
So far this month, the average daily price for regulated rate customers linked to the wholesale market – including the adjustment for the gas cap mechanism (6.02 euros/MWh) – has stood at 126.02 euros /MWh, which represents a decrease of 22.73% compared to the price of October and 34% compared to a year ago, according to data from Grupo ASE.
Analysts from the consulting firm explain that the drop in the price of gas in Spain (Mibgas), which is at levels well below those of the European market, is behind the abrupt reduction of the ‘gas cap’. In addition, electricity consumption in the first half of November has plummeted by 9% compared to the same period last year. In the last two months, the demand has been below the daily average of 600 gigawatt hours (GWh), which has not happened since the confinement due to the pandemic, when it fell to 539 and 560 GWh in April and May, respectively.
Behind this trend are the high temperatures, the moderation of household consumption due to high prices and the reduction in industrial consumption, which in September was 10%. In addition, the drive for self-consumption, which is on track to break another record and exceed 1,500 MW installed, would also explain part of the decline, according to ASE analysts.
In this way, so far in November, the demand for gas to generate electricity has fallen by 23.6% compared to last October. Partly thanks to the drop in consumption, but also to the boost in wind power, which is gaining prominence as storms set in, and the coupling of the Almaraz II nuclear power plant, under maintenance since the end of September.
The lower demand has also reduced electricity generation, which has been 7.6% less than in November of last year. However, the fall could have been even greater if it were not for the export balance to France and Portugal, adds the ASE group.
