The electricity market is collapsing: a whole week and electricity prices are zero euros every day

Los Electricity prices They collapsed and now have falling records. The wholesale electricity market – where electricity companies and traders buy and sell energy that will be consumed the next day – is collapsing, and prices have been at zero euros a day for several hours, something that has not happened for a long time. Each one.

he Average daily price of electricity The market, which serves as the primary reference for determining regulated electricity prices for about eight million homes, was set in recent days Knockout prices. According to provisional data released by the Iberian Electricity Market Operator (OMIE), for Friday, March 1, the average price for the whole day will be 2.01 euros per megawatt hour (MWh) and in previous days the daily price ranged between 3. and 9 euros per MWh. .

Wholesale electricity market, also known as Swimming pool, sets a different price for each hour of the day, depending on the electricity demand for each and the price of the electricity production technologies used at each moment. Prices Through a marginal system, which makes the newest and most expensive technology necessary to cover demand, the prices of all other technologies are determined at every hour of the day.

Some so-called sub-marginal generation technologies (renewables, nuclear, hydropower) enter the market at a price of zero, so when the production of these energies is sufficient to cover all planned consumption, the price remains at this zero in euros. The underlying cause of the current price collapse is a combination of fThe massive spread of renewable energies Moreover, the demand for electricity decreases.

Collapse of electricity prices

This has happened very intensely in recent days. Over the past seven days, several hours each day have been marked at zero prices. he The electricity market has not recorded zero prices for seven consecutive days since February 2014Only ten years ago. Over the past decade, the maximum number of consecutive days with zero working hours was in November last year, but then only for three consecutive days, according to an analysis of pool data by energy consultant Francisco Valverde.

The times of the day when low prices are recorded in the electricity market are also undergoing profound changes. Traditionally, the lowest prices were concentrated at night due to lower business activity and lower energy consumption, but now they are increasingly recorded during the central hours of the day due to the impact of increased production on price formation. Plants and the self-consumption boom.

This is what happened last week, when clocks were recorded at zero euros mostly in the middle of the day and early afternoon. Last week alone, there were 37 hours recorded with contributions at zero, and there are 43 hours so far this year. In the last seven days alone, the equivalent of a third of the 109 hours recorded in the whole of 2023 were worth zero euros, the year with the highest number of zero contributions since 2014.

In 2022, there were only four hours, and they were all concentrated in the early hours of New Year’s Eve, almost touching the New Year. Even then, for almost a decade, not a single watch had been registered at zero. To find previous collapses of the electricity market to zero euros, you have to go back to 2014, when there were 177 hours in total during the entire year.

During the worst of the energy crisis, the electricity market hit record prices and suffered extreme volatility exacerbated by the economic impact of Russia’s military invasion of Ukraine. For several months, there were exorbitant increases and historic price hikes, with prices even then exceeding €500 per MWh (on the daily market (with some hours above €700 per MWh). Electricity prices finally managed to moderate in 2018. Following the final months of that peak, the number of occasions when the market collapsed and the price dropped to zero has now risen significantly.

There is no free electricity

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The collapse of the electricity market to zero does not mean that consumers get free electricity on their bill. On the one hand, because the development of the wholesale electricity market only has a direct impact on the bill of more than 8 million customers who contracted on the regulated tariff, which is called the Voluntary Price for Small Consumers (PVPC), and now, in addition, its impact is reduced by the reform approved by the government To give more stability to the bill. On the other hand, since the energy price is only one component that makes up the bill of all customers, both those with a regulated price and the majority who have chosen the free market price (whose price is freely set by electricity companies).

In addition to the energy component, the bill also includes specific taxes; Regulated fees, set by the government and used to pay for renewable energy sources, surcharges for areas outside the peninsula or electric system debt; and access fees, set by the National Commission for Markets and Competition (CNMC) and used to finance the costs of transmission and distribution networks. The energy portion of the price may be at zero, but customers must continue to pay for the rest of the components.

(Tags for translation)Electricity price

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