Monday will go down in the history of energy prices in Spain. For the first time since there are records, the price of a kilowatt hour was below zero euros in the wholesale market auction. Specifically, between 2 and 5 p.m. it was set at -0.01 euros and only after 8 p.m. did it exceed the euro per MWh, with a daily average of 2.77 euros.
The rain and winds generated by Nelson, the DANA that has left the vast majority of Easter processions in the chapel, has also triggered the hydroelectric and wind production that enter at zero prices in this daily auction. This added to the fact that yesterday was a holiday in seven autonomous communities and demand was reduced. There is more electricity available than consumers spend.
But the reading of these prices is twofold. This was recognized by the third vice-president and Minister for the Ecological Transition, Teresa Ribera. “The most important thing is to be able to achieve a system that gives stability to prices, that allows investors to be held accountable, that is at a reasonable threshold that does not scare consumers, attracts industrialists and guarantees electricity bills for families that are affordable” , he assured.
These negative prices are certainly a relief to the worn-out pockets of consumers, although it in no way means that they have to give them money back. In some cases, the vast majority, because consumers have contracts that set a price. In the case of those still governed by the regulated price (PVPC) the final calculation includes the price marked in the wholesale market auction, but not only that. Since the beginning of January, the PVPC has changed its formula and now mitigates the direct impact of these wholesale market prices by adding a percentage of the price to the futures market. So in this case the negative price marked on Monday would be offset by the positive marked by the futures market. But there is still more. The bill does not only cover the price of electricity. The monthly receipt also contains various tolls, system charges and taxes. In March, electricity recovered the 21% VAT, which was applied before the extraordinary measures of the central government to mitigate the impact of the energy crisis. It will continue as long as wholesale market prices are below 45 euros per MWh. And it seems that it will continue, at the very least, for the next few months. To this increase in VAT is added the recovery of other taxes linked to light such as production and generation. A tax surcharge, which when times of minimum prices arrive has a smaller impact for the consumer. In the case of these two hours in the negative, the consumer could end up paying around five cents, according to the rough estimate of the experts consulted. “What is happening is that renewables are achieving a downward trend in the price of electricity. That it will continue like this in the short term because now what is missing is demand”, assures Pedro Fresco, director of the Valencian Association of the Energy Sector and former director of the Ecological Transition of the Generalitat Valenciana.
This lack of demand and low prices are what, as Ribera also warns, can complicate the viability of some of the investments, especially in photovoltaic energy that had been calculated for higher electricity prices. “This is only a temporary problem, so if they manage to boost demand, prices will return to normal”, explains Fresco.
