The price of electricity in 2018 is the most expensive in the last ten years

The price of electricity in 2018 is the most expensive in the last ten years


MadridUpdated:

The forecasts are confirmed and, in the absence of data for the last three days of December, the average price of electricity in the wholesale market in 2018 will be the highest in the last ten years.

This cost of electricity accounts for approximately 40% of the final amount of the electricity bill. The rest are taxes and tolls, that is, concepts regulated by the Government.

The average price this year is 57.30 euros per megawatt hour (MWh), which represents an increase of 9.26% compared to 2017.

In December, until today, the average price is 62.09 euros per MWh, according to data from Omie, the wholesale market manager. It is 2.4% more expensive than the same month of 2017.

It should be noted that in the second half of 2018 the price of electricity has exceeded 60 euros every month and that in September reached 71.27, which is the second highest monthly price in history.

This increase in prices also occurs after the Ecological Transition Ministero decided last October temporarily suspend two of the taxes that electric companies suffer, especially the one that taxed with 7% the generation of electricity. The Minister Teresa Ribera, said then that this suspension, which does not abolish, would reduce the electricity bill by 4%. However, other experts in the sector calculated that the impact would be "the same as what a coffee costs".

The finance minister, María Jesús Montero, calculates that the suspension of these taxes will cut revenues by around 1,000 million euros, a deficit that will be more than compensated by higher revenues for CO2 rights.

The reasons why prices have skyrocketed are several. On the one hand, Hydraulic generation has not been high, although the wind has been maintained, and some nuclear has been stopped. Since these are the cheapest energies, they have not been able to push prices down. On the contrary, natural gas power plants, whose electricity production is the most expensive in the wholesale market, have worked more.

But, curiously, it is the rise in CO2 emission rights has had the greatest impact in the wholesale market. According to the analysts of the ASE group, this increase means an additional five euros in the price per MWh. In the last year, the price of CO2 has tripled and has exceeded 20 euros per ton.

The coal and natural gas thermal power plants have a penalty economic due to its carbon dioxide (CO2) emissions. Therefore, the electric companies that own these plants must buy rights (bonds) to emit that CO2 in a European market that functions as a stock exchange and was designed with the purpose of discouraging the use of fossil fuels in the electricity sector and in the industry as a whole.

The ASE group explains that the increase in CO2 emission rights has increased the costs of electricity production via coal and gas, which has a direct effect on the price of electricity because the price of the wholesale market, which has a Marginalist pricing system in which the offers come in order from the cheapest to the most expensive, is indexed to gas matching offers. At present, only when wind energy achieves a significant volume, as happened in November, is it able to neutralize this effect.

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