Highest cost of electricity since gas price cap, €365.33/MWh on Tuesday

The average wholesale price of electricity in the regulated PVPC market is at its highest since gas prices were capped two months ago, hitting €365.33/MWh on Tuesday.

This is a 34.77% increase on Monday's average cost and the first time prices surpass €360/MWh despite the gas price cap. 

Without the EU agreement known as the Iberian exception allowing Spain and Portugal to lower gas prices for a year, however, electricity prices would average €476.77/MWh.

Soaring electricity costs

Electricity prices have been on the rise since the summer of 2021, when the January 2012 record of €103.76/MWh was first broken.

Costs have skyrocketed since then as natural gas reserves, which are needed to power combined-cycle plants, are low – a situation that has been exacerbated by geopolitical unrest between the EU and Russia, especially following the invasion of Ukraine. 

There is also an overreliance on more polluting electricity sources that incur hefty CO2 emissions rights: only 19.8% of Catalonia's electricity came from renewables in 2020. 

Regulated PVPC market v. free market

These wholesale price increases affect the 10 million households with contracts in what in Spain is known as the regulated electricity market, or the PVPC.

People whose contracts are in the so-called free market, an estimated 17 million households, pay a fixed amount every month regardless of daily wholesale price fluctuations.

Spain's 'bono social' electricity bill vouchers are only granted to those with PVPC contracts.