The light is already 50% more expensive at night due to the blow of the rise in gas

The price of electricity soars at dawn more than during the day due to the greater use of gas to produce it and the cost of compensation to the electricity companies for the Iberian exception.

The spiral of increases in the price of electricity continues to worsen. August has become the month with the most expensive electricity in history and this Wednesday the second highest daily price has been reached so far and the highest since it was applied the famous Iberian exceptionwhich is not preventing the energy from continuing to rise but it does make the increase is much less than that which consumers would suffer if these measures had not been adopted.

The wholesale electricity market -in which electricity companies, marketers and traders buy and sell energy- reached an average price of only 154.9 euros per megawatt hour (MWh) last month, according to the records of the market operator OMIE. But to calculate the average price of electricity for the more than 10 million clients with a regulated tariff, another 152.9 euros per MWh must be added corresponding to the compensation paid to electricity companies that have gas plants, as a result of the application of the cap on the price of gas contemplated by the Iberian exception.

The final price, the one that makes August the most expensive month in history, is 307.8 MWh. If the gas cap of the special mechanism activated in Spain and Portugal last June had not been applied, the final price of the electricity market would have been 376.7 euros per MWh, almost 19% more expensive. The Iberian exception is mitigating the rise and is allowing the Spanish market has prices far removed from the records of other large European countriesbut prices continue to rise in Spain.

Return to the price per hour

The natural gas price crisisl, with the international markets at record highs and anticipating more increases due to Russia’s threat to cut off the tap to Europe, and the compensation to thermal power plants implied by the Iberian exception, the price gap between the different hours of the day and making electricity more expensive at night than during the day.

A year after the Government and the National Market and Competition Commission (CNMC) revolutionized the electricity bill by dividing the price of electricity according to the time of consumption and when many consumers had already adapted their habits to consume electricity at night to take advantage of the cheapest prices (remember the jokes about ironing and putting on the washing machine at dawn), the so-called Iberian exception and record gas prices in international markets turn the situation upside down.

Why? Because at night is when gas plants are being used more to cover demand, given that solar plants do not produce and given the current situation of low generation of hydroelectric power due to drought and wind power due to lack of wind. During the month of August, the price of the night hours was on average 50% higher than the evening hours.

Specifically, the final price of electricity (market price plus the cost of adjusting gas plants) was an average of 362 euros per MWh at dawn, between midnight and eight in the morning. However, between noon and six in the afternoon, the period of greatest solar radiation, when the contribution of photovoltaic plants is greater, the average price remained at 242 euros per MWh, according to data from the ASE Group energy consultant.

“The cost of compensation adjustment has much more impact in the hours in which the gas combined cycles produce more, which usually coincide with the moments of low or null solar radiation and little wind generation”, point out from Grupo ASE, which underline that during the night hours the cost of compensation to the electricity companies skyrockets due to the greater operation of the gas plants. β€œThe amount of the adjustment is linked to the volume of production of the combined cycles and the daily price of gas (Mibgas), and both are rising”, emphasizes the consultant.

In fact, the compensation to the gas plants to cover the real costs of their production -which is now paid by users of the PVPC regulated rate and by free market customers when their rates are reviewed by the companies- reached in the night hours 200.5 euros per MWh, almost double the 112 euros per MWh for evening hours.

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