This June price rise of 10.2% is due to the limited effect that the Iberian exceptionity launched so far, which has limited the price of gas in order to lower the electricity bill. In an international context of rising gas prices, the cap was implemented in the middle month. It came at a time when the price of gas had risen 160% to 130 euros/Mwh. It was at 80 euro/Mwh at the end of May.
These increases have resulted in higher compensation for companies that activate combined cycle plants to meet all demand. It averages at 92 euro/MWh. This amount is added into the daily auction result. The average price for the month was 218 euros/MWh. This is 16.6% more than May and 162% higher than last year. June is now the third-most expensive month in the history of the country, surpassing only March and December when war broke out.
Although the European energy situation has not been ideal for applying the ceiling in June 2015, expectations for the next few weeks are not good. Russia’s threats to cut off gas from Europe are causing a disruption in the energy environment. This decision will have a major impact on Eastern countries that depend on this resource. Even though winter reserves are growing, Putin’s drastic decision could result in restrictions. The market anticipates new price increases.
Additionally, generation is forcing Spain’s gas combined cycle plants to be reactivated to meet all demand in an environment with low renewable production and high heat waves. Red Electrica’s latest data shows that 27% of electricity used this month has come from combined cycles. This is the highest combined cycle percentage in the last 15 year for a complete month. It has reached 42% in some days, which is almost half the amount of light used by the system. These numbers are far greater than the contribution made by gas cycles which averaged 17% per year at the start of the year.
These plants are being used more frequently than ever due to France’s increased demand for electricity. Since the Iberian Leave, which is a mechanism to limit the price of natural gas and lower the electricity bill came into effect, electricity exports from Spain to France have risen to their highest levels. This means that the Association of Electric Power Companies has indicated Monday that the increase in electricity prices in Spain will reduce the impact of the measure.
The organization points out that interconnections with France, since June 15, have been operating at maximum capacity almost continuously. This is due to the cost of the cheapest light in Spain’s electricity system. Aelec predicts that the electricity exchanges will explode to a maximum of 25 terawatthours (TWh) per annum, roughly 10% of the demand from Spain, and thus quintuple the 5-6 TWh it was at the time.
