The effect of the Iberian cap is diluted with the gas through the clouds

Electricity bill. / CR

The implementation of the mechanism prevents electricity prices from being even higher, but does not cause the drop in the bill estimated by the Government

Jose Maria Waiter

Among the causes that explain this rise in prices in June (10.2%, maximum in almost four decades) is the limited impact that the launch of the Iberian exceptionality has had so far by limiting the price of gas for lower the electricity bill. The start of the cap came in the middle of the month, in an international context marked by new spikes in the price of gas, which has risen 160% this month to around 130 euros/Mwh. At the end of May it was at 80 euros/Mwh.

These increases have resulted in the compensation that must be paid to the companies that have to activate the combined cycle plants to cover all the demand, being greater than expected. On average, it is around 92 euros/Mwh so far this month. This amount is added daily to the result of the electricity auction, which has benefited from the cap, being between 130 and 150 euros/Mwh. But the fall has not been enough to lower the price of a final electricity price that has barely fallen below 200 euros/Mwh, when in May it was set below that reference.

European energy conditions have not been the best for the application of the ceiling in June, although expectations are not encouraging for the coming weeks either. The energy context is marked by threats from Russia to cut off gas to Europe, a decision that has an impact above all on Eastern countries, highly dependent on this raw material. Although reserves are increasing for the winter, a drastic decision by Putin could end in restrictions. And the market anticipates it with new price increases.

In addition, generation is forcing the reactivation of a part of the combined cycle gas plants in Spain to cover all the demand in an environment of scarce renewable production (the cheapest) and with high temperatures due to heat waves. So far this month, 27% of the electricity consumed comes from combined cycles, according to the latest data from Red Eléctrica. This is the highest percentage provided by these facilities in the last 15 years for a full month. In some days it has exceeded 42%, that is, almost half of the light consumed in the system. These figures far exceed the contribution made to date by gas cycles, whose average was 17% since the beginning of the year.

The increase in the use of these plants is caused not only by the system's own needs (renewables barely represent 40% in June, compared to 55% on average for the year; and the Trillo nuclear power plant has been paralyzed for several weeks) ; but also due to the increase in the demand for electricity by France. In fact, electricity exports to France from Spain have shot up to maximum levels since the entry into force of the Iberian leave, the mechanism to cap the price of natural gas for electricity and lower the electricity bill, which means that The effect of the measure is reduced by raising the price of electricity in Spain, as indicated on Monday by the Association of Electric Power Companies (Aelec).

This organization points out that since the launch of the mechanism, on June 15, the interconnections with France have operated at maximum capacity practically without interruption, thus reaching "maximum saturation in the export direction", due to the price of the cheapest light in the Spanish electricity system by measure. Aelec anticipates that these electricity exchanges will skyrocket to a maximum of about 25 terawatt hours (TWh) per year, approximately 10% of the demand in Spain, thus quintupling the 5-6 TWh it amounted to until now.

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