The average savings in the cost of energy for electricity consumers who benefit from the gas cap has remained at just over 10% in its first week in force, according to a provisional estimate that in any case is far away for now of the cut of between 15% and 20% announced by the Government.
The long-awaited Iberian solution had a marked start due to the exceptional circumstances of last week's heat wave, the earliest in history. The very high temperatures, the lower renewable production and the greater demand for air conditioning equipment triggered the production of electricity with gas, which diluted the effect of the measure because it increases the compensation that must be paid to the generators for the real price of that raw material.
In addition, the implementation of the mechanism has coincided with a time of very high gas prices while the number of consumers who have to finance it (since they are the beneficiaries of the measure) is still relatively low: for now they account for around 41% of the demand for electricity, which represents the contracts indexed to the so-called electricity pool, such as households with the voluntary price for small consumers (PVPC) and about 70% of industry consumption.
The savings in the first seven days of the mechanism that began its application on June 15 has thus remained at an average of 10.1% and only exceeded 15% during the weekend, coinciding with the lower demand of those two days non-working days
This is an estimate of the savings obtained from the wholesale market price that would have resulted if this measure had not been put in place.
This calculation can be made by means of a mathematical formula based on the data published by the Iberian Electricity Market Operator (OMIE) and the daily price of the Iberian gas market (Mibgas): it consists of subtracting from the Mibgas daily reference price the 40 euros in which the cap on gas is currently set and dividing the result by 0.55, which is the estimated average performance of combined cycle plants established by the Royal Decree that approved the Iberian solution.
This was explained this Monday in a meeting with the press Pedro González, director of regulation of aelēc, who pointed out that the savings in the first four days in which the measure has come into force have been "less than what could be expected". The electricity employers figure them at 11%, based on provisional data from OMIE. With the definitive ones, published this Monday, the cut is less, 9%. In any case, it is an average saving: it does not take into account that, until now, the cost of compensating the gas plants for the cap is generally higher in the early morning hours, when the demand of domestics is lower.
In its daily analysis of the operation of the gas cap, the Government highlights that, with the prices of this Tuesday, which show a price increase for consumers in PVPC of 4.4%, up to 270.17 euros, "the real value paid by consumers exposed to the mechanism" continues "to be lower" than that registered in the wholesale markets of Italy (€342.5/MWh), France (€354/MWh) or Germany (€288.6/MWh).
This price is the result of a 6% increase in the reference gas price in the Iberian market, to 116 euros/MWh, the highest since the mechanism came into force, with a demand 2% higher than that of Monday. , up to 849 gigawatt hours (GWh), while combined cycle generation increased by 22% (up to 334 GWh) and wind power fell by 18%, to 104 GWh.
The Executive highlights that the monthly electricity futures market for 2022 shows prices for Spain below 200 euros/MWh: between 152 and 177 euros/MWh. It is a level "much lower than the prices of Germany and France", but higher than the 130-140 euros in which it was initially calculated that the Spanish pool would fall with the Iberian solution.
The director of regulation of the electricity employers' association made it clear this Monday that it is too early to draw conclusions and it is "hardly predictable" how prices will evolve in the coming months, because it is "very complicated" to know how the Iberian cap will affect the electricity futures, since “long-term liquidity has been damaged” and “the scenario is tremendously complex”.
“It all depends on the price of Mibgas”, which has gone from 70 euros at the end of May to 116 euros this Tuesday, in a context of growing concern about the future of Russian gas supplies to Europe.
But in González's opinion it will be "complicated" to reach that goal of reducing the bill by between 15% and 20%. This would require a reduction in energy prices of between 30% and 40%, which has become the main item in the final bill, although taxes and network costs must be added, among others: "It will depend a lot on weather conditions and the availability of renewable resources.
The aelēc director pointed out that the mechanism, which has allowed Spanish wholesale market prices to now be practically in line with those of Germany and well below those of France, has aroused a "logical expectation in the rest of the European markets" and a "notable interest in the rest of the European associations", regarding "how the drop occurs and who pays that compensation" to the cycles.
The employers' association that brings together companies such as Iberdrola or Endesa warns that one of the collateral effects of the measure has been to trigger electricity exports to France "from day one", which also partially dilutes the effect of the Iberian solution, because that extra demand from French consumers (who do not pay compensation to the cycles) has to be covered by resorting to gas plants. And the greater the production from this source, the greater the need to resort to combined cycles with lower efficiency and higher costs.
aelēc, which warns that the congestion rents paid by the French side for these imports will not be enough to finance the measure, assures that exports to the French market may increase fivefold in the next year, reaching a maximum of 25 annual terawatt hours, approximately 10% of Spain's demand, compared to the 5-6 TWh that France had been importing before the gas cap.
However, that is a calculation of maximums, which does not take into account the current restrictions that the interconnection with France has suffered for months.
On the other hand, as the months go by, the number of contracts that will have to finance gas compensation will increase. That will decrease the unit cost of that payment to the cycles. All contracts that are renewed or signed after April 26 will begin to pay compensation as they expire until May 31, 2023, when this exceptional mechanism will expire. By then almost all the demand will end up paying the compensation. Only multi-year contracts that have not expired at the time will be issued.
According to aelēc, there is great uncertainty about the maturity rate of these contracts. González did not want to anticipate if there is going to be a transfer to the PVPC, as a recent Fedea study has already predicted. "The complexity of the measure and the extension of different types of contracts, terms and conditions will lead the consumer to have to search and decide," explained the employer's director.
And although on the one hand the cost of this compensation to the cycles will fall as more customers finance it, the effect of the Iberian solution will also be diluted after the seventh month. Then, the maximum cap on gas will rise from the current 40 euros/MWh to 45 euros, a figure that will increase by 5 euros per month until May of next year.