MADRID – Record-breaking electricity prices this year in the wholesale market in Spain. Moreover, this Wednesday for the first time since there are data above €300 per megawatt-hour (MWh).
The increase in the price of natural gas, the increase in CO2 emission rights (CO₂), and the absence of wind bring electricity to an average of €302.48 per MWh, according to data from the Operador del Mercado Ibérico de Enrgía (OMIE). That’s 3% more than Tuesday when the record was also broken, and almost six times more than a year ago.
The price increase is occurring all over Europe, with prices above €300 in all major continental markets. In the French wholesale market, the MWh will cost €353 this Wednesday, and in Germany €344. Outside the EU, in the United Kingdom, the light will shoot up this Wednesday to €470 per MWh.
Cheapest period still €252
In Spain, electricity will exceed €300 per MWh in all time zones between 7.00 am and 11.00 pm. Something that has never happened before. In addition, the price does not fall below €250 at any time of the day. Six months ago, that price was unthinkable on the Spanish electricity market. As usual, the highest price is recorded between eight and nine in the evening, when each megawatt-hour costs €345, also a historical record. On Tuesday, electricity cost €320, almost 8% less.
The cheapest part of the day for users of the regulated market (40% of the total) to switch on their dishwashers or washing machines will be between 4.00 am and 5.00 am and will cost €252/MWh. That minimum would also have been unthinkable a year or two ago. At that time, the average daily price was around €40 or €50/MWh.
Four more months of tax relief
Shortly before this information was known, Minister Montero of Finance and Public Function informed parliament that he would extend the tax cut for the entire first quarter of next year. The cut was approved by the government to stem the rise in electricity prices. The purpose of this expansion is to try and mitigate the impact of the wholesale market surge on household wallets. Especially as all signs point to a turbulent first part of 2022 in the electricity markets.
The extension of the tax cut will affect the three taxes that were either cut or directly abolished in November: the VAT on electricity bills went from 21% to 10%, the generation tax paid by companies —previously 7%, now exempt — and the special tax on electricity —which went from 5.11% to 0.5%, the minimum allowed by the European Commission. So far, these cuts have continued through January. However, now they are extended until the end of April.
These extraordinary measures have significantly reduced the pressure on household bills. However, the government’s promise that the average electricity bill will not exceed what was paid in 2018 is still a long way off.
The electricity price index is up 47% year-on-year in November, according to statistics bureau INE, with a cumulative increase of more than 43% so far in 2021.