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Is it possible to consume electricity for free when it reaches 0 cost in the regulated market?

Date: May 25, 2024 Time: 16:50:05

The scarcity of the price of electricity in the wholesale market is a constant that is caused by many factors. This has caused that since the energy crisis caused in 2022, as a result of the war in Ukraine, a record cost has been reached, reaching up to 700 euros/MWh, but there have also been in which it has been 0 euros. Does this mean that there are times when consuming light is free? Not really, because there are always fixed costs that the user must assume and that are always reflected in the invoice.

The first thing we need to know is how the wholesale electricity market, popularly known as the ‘pool’, works. It is an hourly auction in which prices are anticipated for the next day. In it, electricity generators and trading companies participate. The cost is set based on the units of electricity to be produced and the demand. This depends to a large extent on the weather conditions, since it is much higher on cold or very hot days, when more energy is consumed for heating or air conditioning.

When does electricity reach zero cost in the regulated market?

When the energy demand is lower than usual, for example in the spring or autumn months, on days when the use of air conditioning devices is not necessary. There may be time slots in which the demand forecast by the wholesale market is supplied by energy and is sold at zero cost or for less than the cost of a coffee. The reasons son:

High supply of renewable energy, driven mainly by the growth in the use of photovoltaic installations of solar panels throughout Spain, and wind power. In the central hours of the day, since the price is lower than that of the energy produced in combined cycle power plants, energy consumption is covered by the sun or the wind.

How can I benefit from the zero cost of energy?

In order to enjoy the zero cost of electricity, you must be a client of the regulated electricity tariff, PVPC (Voluntary Price for Small Consumers). As we saw previously, prices are set by the wholesale market and are characterized by high volatility. Although it is not based on the marketers, but rather it is regulated by the Ministry of Industry, Commerce and Tourism, it does have to be contracted through the so-called Reference Marketers

In this way, during the previous day you have to consult the price of energy to protect when it is lower and consume less energy in the bands in which the cost is higher.

On the other hand, users who have contracted rates in the free market with the marketers pay a fixed price and are not affected by increases or decreases. They have the advantage that the price of electricity can always be known from the moment it is contracted, but they can never enjoy zero cost. Only some industrial customers with a free market contract indexed to the regulated market benefit from the decrease in energy prices.

What is the cost on the bill when the price of electricity is zero?

When we consume energy in free time slots within a regulated electricity rate, the bill will never be zero. This is because you have to pay for other fixed concepts that continue to apply normally. They are mainly the contracted power, the access toll, the rental of equipment, the incentives for renewable energies and the remuneration to Red Electrica de España and OMIE.

* This website provides news content gathered from various internet sources. It is crucial to understand that we are not responsible for the accuracy, completeness, or reliability of the information presented Read More

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.
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