“Renewables, a thermal anomaly with temperatures much milder than usual and the application of the Iberian mechanism allow us to enjoy a very unusual electricity price tomorrow in these current times. Do it responsibly.” This is how the vice president of Ecological Transition, Teresa Ribera, explained yesterday on Twitter the reasons why today the average price of electricity in Spain stands at 21.12 euros per megawatt hour. A level that has not been seen since May 9, 2021, before the rise in energy prices became one of the hottest topics today and the financial concerns of families and companies.
The price of this Friday represents a 60% drop compared to what was paid yesterday and is 94.5% lower than the one set on the same day last year, which was 383.67 euros MWh, when the risk of a war between Russia and Ukraine were already discounted in international markets.
The big difference is that these days Spain hardly needs gas to generate electricity. The intense rains of the last few weeks have made it possible to recover the production of hydroelectric energy, which the drought of the last year has almost paralyzed.
Added to this is the intense generation of wind power. An energy that today takes on special intensity and that throughout this year has established itself as the first renewable technology in the electrical system, with a record generation in the year of more than 61,000 GWh, as highlighted yesterday by the Wind Business Association.
Less demand for heating
The much more benevolent weather conditions than usual at this time of year also play in favor of the reduction, since they slow down the usual demand for heating. And, of course, the effect of the Iberian mechanism has an influence, which caps the price of gas for electricity generation at 67 euros per MWh.
This allowed the result of the auction in the wholesale market yesterday to leave the MWh price at 22.34 euros, with a compensation for the negative gas price thanks to the compensation for the export of electricity to France.
Price drop throughout Spain
Without the Iberian mechanism, the cost of MWh in Spain would have been 102.7 euros per MWh. Even so, it would be well below what they will pay in the rest of the countries of the European Union, where the Italian market marked 203.6 euros, the German 185.9 euros and in France 147.3 euros per megawatt hour will be paid. What shows that beyond the arguments pointed out by Ribera to explain the singular situation in Spain, the truth is that the price of gas is also giving a breather to the entire European continent.
The moderate winter temperatures are making it possible to maintain European gas reserves at all-time highs, also at a European level, which lowers the demand for gas in the market and therefore the prices of this raw material in the Dutch TTF international market, a benchmark in Europe. .