Because Of The Wind, Electricity Prices Have Plummeted And Are Almost Free Today.

2021-01-31   |   by CusiGO

Strong winds in recent hours kept the average electricity price at 1.42 euro per MWh, down 98.5% from the peak of 94.99 Euro three weeks ago. According to the Iberian electricity market operator (omie), the average price of electricity at the wholesale market on Saturday was already very low, at 4.19 euros per MWh, which is the same as this Sunday, in sharp contrast to 121.24 euros during the January 9 snowstorm in Philomena.

Earlier this year, the rise in electricity prices triggered a political hurricane, and the opposition called on the government to take urgent action. The government responded that it was a “one-off” rise due to “cyclical” reasons. Tensions within the government have also increased, and we can make a joint appeal to nationalize the power companies and let the executive control prices. Theresa Ribeira, the fourth vice president and Minister of ecological transition, rejected the comprehensive measure. “It’s not a good idea,” he exclaimed. As prices have fallen, the debate has gradually subsided, and it has not surfaced again, as rising temperatures have reduced demand and wind power has increased supply, and prices have completely reversed.

A sharp fall in electricity prices will directly benefit consumers subject to regulated or voluntary small user tariffs (PVPC), even though it accounts for only 35% of invoice costs. Those in the free market have rates set by the company, which will not vary with the rise and fall of the wholesale market. Although the average bill paid by people with regulated tariffs is usually nearly 30% lower than that paid by people in the free market, only 35% of the population benefits from PVPC, despite higher consumption (according to the CNMC).

If, in the first two weeks of January, the Philomena crossing and the subsequent cold wave pushed demand to the peak and pushed up electricity prices, then due to the high (especially cheap) wind power generation, the decline this month is so small that it can meet most of the demand. So, although 18 cents per kilowatt will be consumed for a few hours on January 8, 3 cents will be paid today, depending on the price set on Saturday in the daily market for the next day. The lowest point is between 3 a.m. and 9 a.m.

With the fall over the weekend, the average price of electric lights has fallen 96.6% from 42.51 euros in 2021. Although prices had been falling over the weekend, strong winds were particularly severe in most parts of Spain due to reduced demand for working days due to declining economic activity. The lowest price in 17 years (33.97 euro / MWh) reached 72 euro / MWh due to the rising demand and price of natural gas. The abnormal cold in Asia exacerbated the consumption of natural gas and led to the diversion of natural gas ships to these regions. In the first half of January, hurricane Philomena increased Spain’s electricity demand by 7%. On January 8, it reached the second highest electricity price in history, 94.99 euros per megawatt hour (MWh), only lower than 103.76 euros on January 11, 2002.