The price of electricity will reach the lowest level in a decade tomorrow, 0.59 euros per MWh

For more than 16 hours this Saturday, the price of electricity in the wholesale electricity market will be zero euros, the average for the day will be 0.59 euros megawatt hour (MWh), which is the lowest price in the last decade according to data published on Friday in the OMIE wholesale market. We would have to go back to 2014 and 2013 to find such low levels for a day with average prices for a day below the euro/MWh.

The ‘miracle’ is the work of the intense wave of wind and rain that is hitting the entire country and is allowing maximum performance of wind energy. Added to this is the decrease in demand on weekends, which will lead tomorrow to the maximum price being a mere 3.5 euros MWh, which will be reached between 7:00 p.m. and 8:00 p.m.

In the first eight days of March, the average price paid in the wholesale electricity market was 12 euros/MWh, after seven days below the level of 10 euros/MWh.

In February, the average daily price of the wholesale market stood at 40 euros MWh, with a decrease of 46% compared to January and 69.7% compared to a year ago when the average stood at 132.06 euros MWh.

The drop in prices in the wholesale market has triggered the VAT on electricity to once again recover the 21% rate that was applied before the outbreak of the energy crisis in 2021. The last Council of Ministers last year approved that the VAT of electricity would go from 5% to 10% and that rate would be maintained until the end of 2024, as long as the condition was met that MWh prices in the wholesale market remained high, above those 45 euros MWh.

Specifically, the VAT would become 21% whenever the wholesale price was below that bar in the calendar month prior to the last day of billing. That is, all invoices that include consumption for at least one day in March will have VAT of 21%. Only households with the social bonus are free from this increase, since their VAT will remain at 10% throughout 2024.

In turn, this year a new formula has come into force to calculate the price of electricity in which the daily wholesale market will gradually lose weight due to a new method of calculating the PVPC. With the new reference, the daily price loses weight and the futures market references are incorporated, so that these represent 25% in 2024, 40% in 2025 and 55% from 2026 onwards.