Clara Hernanz Lizarraga and Rodrigo Orihuela, Bloomberg News
MADRID
EnergiesNet.com 09 02 2022
Spanish electricity cost less than half of what German power did in the market in August as it benefited from a cap on natural gas prices, according to Spain’s association of large energy users.
The average price for electricity in Spain’s wholesale market in August was 154.89 euros ($156) per megawatt-hour, without including a cost related to the cap, the AEGE group said. That was 67% less than in the German market and 69% less than in the French market, it said in a survey released Wednesday. Spanish prices are still significantly lower when the cap is added.
Although Spain is experiencing record prices, they’re significantly lower than those seen in most European nations in recent days. This matters at a time when policymakers are looking at ways to change the rules of its energy market, which European Commission President Ursula von der Leyen has said is broken.
Von der Leyen on Aug. 29 announced that the European Union is preparing to intervene in the energy market, hours after German electricity prices for next year briefly surged above 1,000 euros per megawatt-hour. The next day, Spain’s top energy policy maker confirmed media reports that Madrid is looking to propose its pricing system for the rest of the bloc.
To be sure, the cheaper average price hasn’t fully protected big industries in Spain from the upheaval in energy markets. Newspaper Expansion reported Thursday that a number of power-intensive companies are halting operations, including steel-makers and ceramic manufacturers. Part of the problem for industrial users is that co-generation plants don’t benefit from the price cap scheme.
The AEGE also said in its survey that large French and German industrial users buy power with “more competitive contracts” than the prices in their markets.
Earlier this year, the Commission granted Spain and Portugal a waiver that allows them to uncouple natural gas from the cost of electricity in the wholesale market by capping the price of the fossil fuel when it’s used for power generation. This has helped the two countries avoid the larger price surges seen elsewhere.
In Spain, the difference between the capped prices and real prices of gas is paid through a compensation mechanism that’s funded by a special charge on the bills of all electricity users, including those who use renewable sources. In August, the compensation charge averaged 152.91 euros per megawatt-hour, according to AEGE.
Under Europe’s current system, the most expensive type of technology used to generate electricity usually sets the price for the entire market.
bloomberg.com 09 02 2022
