Some 288 euros per megawatt hour and more than 300 euros per night: this is the new record that the price of electricity reaches this Thursday in Spain, an unprecedented situation in the history of the country that further complicates the situation for consumers who have seen their annual spending on the electricity bill increase by more than 150 euros compared to the previous year.
“There have never been such large and exaggerated increases in the price of electricity in such a short period,” Enrique García, from the Institutional Relations department of the Organization of Consumers and Users (OCU), explains to Euronews. of the price increase in June.
“Perhaps in Spain the operation of the electricity market is a little different from the rest of Europe, where we have a large part of the consumers and the regulated tariff”, argues García. “And this regulated tariff is directly linked to the daily market, where fluctuations in the price of electricity are more noticeable.”
García also explains the record increase in electricity in Spain due to the global rise in the price of gas and the increase in the prices of CO2 emission rights in the European Union.
“In the Spanish case, these effects are amplified by the system of marginal fixing of the price of electricity, where the entire source is remunerated based on the most expensive technology,” says García. “This, in our view, amplifies the effect of the rise.”
This, for Spanish consumers, translates into a rise of around 30 percent in the price of the electricity bill so far this year, according to data from the OCU.
In addition, García warns that consumers are going to be doubly penalized by the increase in the price of the purchase of basic products.
According to a recent OCU study, products such as eggs and chicken meat, lamb chops, rabbit meat and fruit have risen very rapidly in the period from June to September.
“Obviously this rise generates a lot of uncertainty in consumers and especially in vulnerable consumers,” says García. “Although there is a social bonus, unfortunately this does not reach those who really need that help, and therefore it is vulnerable consumers, those with the lowest incomes, who are suffering the most from this rise in electricity.”
The role of the pandemic
The economist Moisés Martín points out another fundamental factor in the current energy crisis: the unprecedented global economic slowdown due to the pandemic.
“The pandemic stopped two things: on the one hand the demand, that is, the ability that people had to consume, and on the other hand it stopped the supply, which is the ability that companies had to produce,” explains Martín, who adds : “what has happened in 2021 is that the recovery in demand has been much faster than the recovery in supply”.
The return to more normal life has led consumers to gradually recover their consumption habits, but production “has not been so agile when it comes to increasing its levels,” says the economist.
“That is why we say that it can be transitory to the extent that production goes back to picking up or recovering the rhythms that it had previously.”
The debate on energy prices at the European level
The Ministers of Economy and Finance of Spain, the Czech Republic, France, Greece and Romania presented a joint declaration in Luxembourg asking the rest of the European partners for greater cooperation to acquire gas jointly.
“Gas prices and wholesale electricity prices have increased dramatically in recent months. It is a considerable burden for households and our companies,” the Ministers of Economy and Finance of these five countries noted in a joint statement during the meeting. of the Ecofin that was held in Luxembourg.
The Spanish, Nadia Calviño; the French, Bruno Le Maire; the Greek, Christos Staikouras; the Czech, Allena Schillerová; and the Romanian, Dan Vilceanu, first asked for a “toolbox” to be able to “react immediately” to the price increase.
In their joint statement, the five countries also called for an investigation into how the gas market works in Europe to “understand why current gas contracts have been insufficient”, and stressed the importance of developing “common guidelines on storage” for ” mitigate and smooth price increases. “
Spain, France, Greece, the Czech Republic and Romania also proposed reforming the wholesale electricity market to “better establish the link between the price paid by the consumer and the average cost of electricity production in national mixes.”
And finally, they highlighted the “key role” that low-carbon energy such as biomass, wind or solar energy should play.
Eddie is an Australian news reporter with over 9 years in the industry and has published on Forbes and tech crunch.