The wholesale electricity market, the so-called ‘pool’, will register this Monday for the first time in history a negative price for three hours, in which the megawatt hour (MWh) will be at -0.01 euros, according to provisional data from the Operator of the Iberian Energy Market (OMIE). For clients with a regulated bill it will not be perceived, while for those on the free market it will barely be noticed, unless this situation occurs on more days this month.
Specifically, the three hours at a negative price will be between 2:00 p.m. and 5:00 p.m., and is mainly due to the Nelson storm that has left a lot of rain and, above all, wind so that the renewables can work at full capacity. They are two of the cheapest ways to generate energy and cause prices to plummet.
Furthermore, in several autonomous communities it will continue to be a holiday this Monday and that early afternoon time slot is the one in which the least consumption occurs throughout the day.
With an average price of 2.76 euros/MWh during the day, from midnight until 8:00 p.m. this Monday, the price of electricity will be zero euros or practically zero during all hours to rebound from 9:00 p.m. to 10:00 p.m., band in it it will cost 21.43 euros/MWh, the maximum of this Monday.
In this way, this April 1, 2024 will be the first day that the daily wholesale market will register some hours with negative prices in our country.
This negative price only occurs this Monday in Spain, since Portugal has continued to maintain zero and has not dropped to negative prices. In other European countries, hours with a negative price were recorded in the past.
As background, on December 25, 2022, negative prices were seen in the Spanish electricity market for several hours but not in the wholesale market directly, as is happening this Monday, but as a consequence of the gas cap mechanism that was active at that time.
In any case, these negative prices in the wholesale market that will be recorded this Monday will not be reflected in the Small Consumer Voluntary Price (PVPC) or regulated rate, since with the entry in 2024 a new calculation method was adopted that incorporates a price basket in the medium and long term and there are also fixed costs for the consumer for tolls, charges and system adjustments.
The month of April thus begins, continuing the trend recorded in March, in which the average price was 20 euros per megawatt hour (MWh), half that of the average price recorded in February and 77.5% less than in March 2023, when it stood at 89.6 euros/MWh.
Furthermore, last month a minimum price of 0.54 euros/MWh was set on March 10, due to the high participation of renewable energies due to the storms that have passed through the country.
In fact, on 16 of the 31 days in March the pool average was below the level of 10 euros/MWh, and in many hours the price was zero euros/MWh, although this price is not transferred then to the receipt exactly, since there are fixed costs for the electricity consumer for tolls, charges and system adjustments.
In February, the average daily price of the wholesale market stood at 40 euros/MWh, with a decrease of 46% compared to January.
This fact caused electricity to temporarily recover its Value Added Tax (VAT) of 21% since March, after the wholesale market price registered a lower average in February than 45 euros/MWh, the ceiling set in the Real. Decree of urgent measures.
The last Council of Ministers last year approved that the VAT on electricity would go from 5% to 10% and that this rate would be maintained until the end of 2024, as long as the condition that MWh prices in the wholesale market were met. remain high, above those 45 euros/MWh.
Specifically, VAT would become 21% whenever the wholesale price was below that level 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 exempt from this increase, since their VAT will remain at 10% throughout 2024.
In any case, the ‘pool’ does not exactly represent the final amount in the price of electricity for a consumer covered by the regulated tariff, since with the entry in 2024 a new method of calculating the PVPC was adopted, which incorporates a basket of medium and long-term prices to avoid strong fluctuations, without losing short-term price references that encourage savings and efficient consumption.
Specifically, the proportion of linkage with the pool price will be progressively reduced, to incorporate the references of the futures markets, so that these represent 25% in 2024, 40% in 2025 and 55% at from 2026.
