Categories: Business

Iberdrola and Endesa face lowest electricity prices in 15 years

A megawatt falls to 35-39 euros, a level not seen since 2009, at the height of the brick crisis, and this undermines the strategy of Iberdrola, Endesa, Naturgy and Repsol, as well as the government’s pricing policy.

Large electricity supply companies Endesa, Iberdrola, Naturji, Repsol, TotalEnergyand dozens of small marketers next month will face stormy March.

Electricity prices in Spain will reach their lowest level in a decade and a half. This is clear from the pre-purchase agreements that close in February on the wholesale market or pool.

The prices at which these contracts are concluded are below 40 euros per megawatt. In particular, as of last Friday, prices were set at 39 euros per megawatt, which is five euros less than the price at which they began to be set in early February.

Since these contracts are for the future, hesitate until the due date. lExperts suggest that prices could fall to 35 euros. These are numbers not seen since 2009 and 2010.at the height of the brick crisis in Spain, when demand for electricity fell sharply due to reduced economic activity.

According to consultancy Tempos Energética, prices have already reached pre-pandemic levels when the electricity market collapsed due to a number of circumstances.

As a result of Covid, prices began to rise sharply.first for increase in the cost of CO2 emissions rightsand then for Russia’s war against Ukrainecausing the cost of gas needed for some power plants to soar.

Israel is not Russia

Today’s decline is caused by a different set of circumstances, but in the opposite direction. European gas stock levels are “ideal” for this period of winter.– explain in Tempos.

Except, Nothing is expected to push energy markets higher next month., due to weather forecasts that indicate moderate temperatures. Except, Unlike the Russia-Ukraine conflict, liquefied natural gas (LNG) supplies and logistics are immune to the Palestinian-Israeli conflict.

temperature in Europe They are three to seven degrees above normal.

Winter without winter

This “winter without winter” experts say. Since records were set, Spain experienced the warmest winter in 20 provinces and the second warmest in another 16 Spanish provinces.

All this did Iberian gas market (Mibgas, wholesale market in Spain) prices fell by almost 30% (10.66 euros per megawatt-hour) since January 8 last year, increasing from 36.82 euros to 26.16 euros. The new scenario structurally destroys the entire gas market and, as a consequence, the electricity market.

The fall in prices extends beyond March. Futures contracts for the second quarter of the year began trading a few days ago at 60 euros.

Trapped in a spiral

At the end of last week they had already dropped below 50 euros.. The effects of price reductions follow a chain, like a spiral. Large electric companies Endesa, Iberdrola and Naturji

at the same time, a large number of products are sold in advance to their own sales companies, They are now trapped in contracts priced higher than the day’s market.. The same goes for independent trading companies that enter into futures contracts that are priced higher than the spot market.

Competition that devours

In renewable energy, profitability is narrowing, making their projects unviable. And There is more generation than consumption, they are entering into fierce competition place production, further lamination of prices (energy cannibalism).

Is the receipt more expensive or cheaper?

Over the past three years, energy bills in Spain have experienced unprecedented chaos due to historical price fluctuations, regulatory changes in taxes and a radical change in tariff calculation methodology.

The big question is whether people are paying more or less now than before. The answer is not simple. It depends what you compare it to. According to the Commission for Markets and Competition (CNMC) price simulator, the average user will pay between January 1 this year and yesterday, February 18, a total of €77 for a standard consumption of 342 kilowatt-hours.

The same check a year ago would have cost 80 euros. Two years ago this bill would have been €136. That is, the user is now much better than in 2022, but almost the same as in 2023.

The problem is what might happen next, because part of the blame for the bill’s vacillation lies with taxes. At the beginning of 2022, VAT was 10%. At the beginning of 2023 it was 5%. Now it has returned to the 10% level. If a megawatt of electricity falls below 45 euros, VAT will automatically rise to 21%. If not, it will remain at 10% throughout this year. The electricity tariff is added to the VAT effect. It currently stands at 2.5%, but will jump to 3.8% in April and then return to more than 5%.

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