The wholesale price of electricity will close July with an average of 90.5 euros per megawatt hour (MWh), close to 65% below the same month of 2022, in the midst of the energy crisis, thanks to the drop in gas and the greater renewable generation. According to the data compiled by EFE, the price registered during this month is certainly lower than the 258 euros/MWh that occurred on average in July 2022, the third most expensive month in history.
So far this summer, light has remained at levels much lower than last summer, when high temperatures and the effects of the Russian invasion of Ukraine caused August to become the most expensive month in history, with an average of 308.6 euros/MWh. Behind this decrease are the fall in the price of gas, which for months has stabilized at around 30 euros/MWh, well below the all-time highs registered a year ago, and the greater share of renewables, despite the fact that in summer it usually falls due to high temperatures.
Lower the price for the generation of renewables and the ‘cap on gas’
On the one hand, the drop in the international price of gas has caused the so-called Iberian mechanism, which since it came into operation a little over a year ago, has contained the price of electricity by 15% by limiting the cost of gas, have not had to apply in recent months.
Thus, this tool chains 155 days without being activated and adds 170 days since it entered into force, since the price of this raw material in the Government, which began at 40 euros/MWh and in the last month has stood at 59.4 euro/MWh. Regarding renewable generation, which in the summer period tends to drop due to the drop in wind power, causing an increase in gas combined cycles, so far this summer it has shown signs of strength, increasing its participation from 39.6% of a year ago to the current 47.7%.
In this sense, in addition to more benevolent temperatures than last summer, the growth of photovoltaic solar energy stands out, which in just one year has seen its contribution to the peninsular energy mix by six percentage points, ranking as the third source of energy, only behind nuclear and combined cycles. According to provisional data from Red Eléctrica de España consulted by EFE, solar energy generated 19.5% of peninsular energy in July -a year ago it was 13.3%-, while nuclear concentrated 22.7 %, and combined cycles, 20%.
Light more expensive than in neighboring countries
This fall in the wholesale market has not allowed Spain to have the cheapest electricity among the great European powers in July, as has happened continuously since the gas cap was produced. In the last month, Germany and France have presented lower values than those registered in the Spanish market, while Italy has remained the neighboring country with the most expensive light.
Thus, Germany and France have set a similar average of 77.6 euros/MWh, despite the fact that in recent months they have been weighed down by their dependence on Russian fossil fuels in the case of the former, and by the prolonged stoppage of its nuclear park the second. For its part, the average price in Italy has reached 112.6 euros/MWh, 25% more than the Spanish market.