Price Of Electricity Falls To A Minimum Of More Than A Year Due To The Collapse Of Gas

The price of electricity in the wholesale market will fall this Sunday to 72.84 euros per megawatt hour (MWh) its lowest level in 14 months you have to go back to August 2021 to find lower values. Two factors explain this decrease the collapse in the price of natural gas and the reactivation of the wind, which will allow wind power to cover a substantial part of the demand for several hours throughout the day.

This drop will be directly noticeable in the receipt of the nine million customers covered by the regulated rate (also known as PVPC) and gives wings to a substantial moderation in the CPI for October, despite the rise in fuel prices.

The sudden landing of natural gas in recent weeks is not only allowing the many combined cycle plants that operate in Spain to do so with lower costs, but has also deactivated for the fourth consecutive day the Iberian exception, the mechanism devised by the last spring to avoid the contagion effect of this fuel on the electricity market as a whole. When gas drops below 40 euros per MWh (it is now 36), the system ceases to apply.

The sum of wind power and solar photovoltaic, by far the cheapest generation technologies in the system, will cover more than 70% of the demand in five time slots between noon and five in the afternoon this Sunday, the day of less activity and, therefore, less consumption of the week.

In that strip, as in almost the entire initial section of the day, the weight of the combined cycles will be practically residual. And coal will practically disappear from the map the plants that burn this fuel, by far the most polluting, will only operate between twelve at night and three in the morning.

What happens to electricity prices in the short and medium term will depend, to a large extent, on two variables, both exogenous price of gas and what happens with the weather. In the first case, the situation seems under control, at least in the most immediate.

The methane tankers are crowded in front of many European ports, before the total full of deposits for winter and the high temperatures for what is usually usual at this time of the year (which until now have prevented the heating from being turned on in most of the continent). In terms of weather, beyond the cold, wind and water will be key: the more wind there is (wind) and the more it rains (hydroelectric), the cheaper electricity will be.

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