Misc 08/01/2021

Cold spell boosts electricity price

Market doubles prices and the receipt for an average home will become more expensive by 19%

Xavier Grau Del Cerro
2 min
Les elèctriques van amenaçar de pujar dràsticament el rebut de la llum si l'Estat no assumia el dèficit de tarifa del 2013.

BarcelonaThe cold spell that is experienced throughout the Iberian Peninsula has as its direct consequence a significant increase in the price of electricity. In the wholesale market, on Thursday prices double those of recent days and exceed 100 euros per megawatt hour (MWh). And the market has already set the prices for Friday: an average of 94.99 euros per MWh, the highest price in the history of the Spanish market, and a maximum of 114.89 euros per MWh at eight o'clock in the evening, which is not the most expensive peak of all time but the highest price in a time slot in the last decade.

Thus, the average price in the wholesale market is this Thursday at 88.93 euros per MWh, a figure that doubles the average of the first days of the year. However, this is the average price, because according to the market operator (Omie), the price will exceed 100 euros per MWh for almost half of the time slots, and will reach a peak of almost 109 euros between eight and nine o'clock in the evening.

This is because the cold weather leads to an increase in demand, and more gas-fired combined cycle plants - which produce energy at a more expensive price than renewables or nuclear - have to come on line. According to sources in the gas market, Mibgas, the price of this energy was on Thursday of 38.9 euros per MWh, 22.4% higher than the price marked on Wednesday.

The data corresponds to the wholesale market for electricity. But the price increase in the wholesale market also affects households expenses. The price of electricity for homes has shot up 27% in the first days of the year and has reached 16.81 cents per kilowatt hour (kWh) in the regulated electricity tariff (PVPC), when in the same period last year it cost 13.24 cents, according to data from the consumer organization Facua.

With these prices, an average user's bill would be around 89 euros, 19% more than during the same period of last year, according to Facua, whose average consumer profile is a household that consumes 366 kWh per month, with a contracted power of 4.4 kW. According to Facua, the electricity bill does not exceed 80 euros for the average consumer from December 2018.

The price of electricity already began to rise in December 2020, when the bill became 7.2% more expensive on average, after 19 months of consecutive decreases, which became more pronounced at the beginning of the pandemic due to lower consumption.

Rise in gas

The rise in electricity prices coincides with the increase in the price of gas for domestic use since 1 January. The regulated gas tariff (TUR) rose between 6.2% and 6.6% at the beginning of the year compared to the previous last four months, depending on the consumption contracted.