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Wholesale electricity prices in Spain rise this week
Despite the hike, energy costs in Spain remain below 10 euros per megawatt hour
The Iberian Energy Market Operator (OMIE) has announced that the price of wholesale electricity, also known as the 'pool', will increase to 7.95 euros per megawatt hour (MWh) on average this Monday March 4, according to provisional data. Despite the hike, the price of electricity in Spain continues to stay below 10 euros for the eleventh consecutive day.
The highest price during the day will be recorded between 8am and 9am, and between 8pm and 9pm, when the price of electricity will reach 25 euros/MWh. On the other hand, the lowest price to run heavy appliances will be seen between 3pm and 4pm, when the cost will drop to just 1 euro/MWh.
The sustained decrease in the wholesale electricity market since February 22 is primarily due to the presence of an Atlantic front causing strong gusts of wind, which in turn boosts the share of renewables, particularly wind, in the power generation mix. Additionally, the decline in demand during the weekends compared to weekdays has contributed to the lower prices.
But this drop in overall costs is something of a double-edged sword, since the VAT on electricity has been temporarily increased to 21% once more since the wholesale market price last month registered an average of less than 45 euros/MWh.
In addition, customers should be aware the 'pool' price in Spain does not directly translate into the final cost of electricity on their bills. The regulated tariff takes into account a range of prices at medium and long-term intervals to stabilise prices and prevent major fluctuations.
As of 2024, the proportion of linkage with the 'pool' price will gradually decrease, incorporating futures markets references to represent 25% in 2024, 40% in 2025 and 55% from 2026 onwards.
Image: Freepik
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