The end of the heat wave brings electricity to its lowest price on weekdays in a month

The end of the heat wave brings electricity to its lowest price on weekdays in a month

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The end of the heat wave brings electricity to its lowest price on weekdays in a month

Towers of the power line network.Getty

With the expected end of the heat wave, the cost of electricity will also give consumers a break. The average daily price of electricity in the wholesale market will stand at 88.92 euros per megawatt-hour (MWh) this Monday, 19.2% below the 110.02 MWh of the previous day, which was on Sunday. most expensive in history, according to data from the Iberian Energy Market Operator (OMIE). This is the cheapest weekday in the last month.

By time slots, the price will range between 109.35 euros / MWh that will cost between ten and eleven at night, and 82.60 euros that will be paid between seven in the afternoon. With the weekend came a small respite and the price of electricity parked the increases after five consecutive days of record. And now, in this new week, the downtrend continues. It also does so strongly thanks in part to lower demand, 12.5% ​​lower than that of Sunday and almost 17% less than that of last Monday.

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In this way, the situation seems to be redirecting, although it remains to be seen if the price drop is here to stay or is it just a small stop along the way. The alerts are activated and the political debate these days focuses on how the system is configured. The Government has even opened up the possibility of creating a public energy company, while one of the coalition partners, United We Can, calls on the socialist wing to accelerate the measures announced by decree law. The opposition, for its part, urges that there be changes to mitigate the increases immediately.

Despite the relief of the last three days, the month is still historically expensive. These increases have a direct impact on the 10.6 million consumers who are within the regulated market, known as PVPC, since the price they pay is indexed to variations in the wholesale market. Although this does not mean that the rest, the 16.2 million customers that are in the free market, will avoid the extra cost: the offers of the marketers are also made according to the evolution of the market. That is, sooner or later, they will end up paying these unbridled prices.

The Executive has a series of reforms underway to reduce the cost of energy, although most will only have an effect in the medium term. Therefore, to curb the rise, at the end of June it lowered the VAT from 21% to 10% on the electricity bill until the end of the year and temporarily suspended the tax on electricity generation (7%) in the third quarter. However, this relief for the pocket of consumers is less and less due to the rise in the cost of energy.

Experts also warn that the market will remain at high prices at least until next spring — the almost 90 euros this Monday is more than double the 36.21 euros paid on the third Monday in August last year. The reasons are the already known: gas is through the roof in international markets and CO₂ emission rights continue to skyrocket. According to a recent report by the Bank of Spain, half of the rise in electricity prices is explained by the price of gas and 20% is due to emission rights.

Price matching

The setting of prices in the daily market is carried out through a complex matching process in which the electricity generating companies and the trading companies launch their offers each day for each hour of the following day. The balance between supply and demand is what determines the price. The cheapest energies, such as renewables or nuclear, have priority, while the most expensive, such as those generated in combined cycle plants or coal, are the last to enter the system.

The final price paid for energy to all plants is determined by the last supply that covers the demand. Therefore, if the most economical sources are able to supply all the demand, a lower price will be paid for the energy. However, if they do not manage to cover all the energy needs, the most expensive ones would be incorporated, making the value of everything that is consumed more expensive. This is what is happening now with a cocktail that joins, on the one hand, the increased demand for the heat wave. And, on the other hand, that less economical energies are still more expensive than usual due to the increase in the price of gas and CO₂ emissions.