New record-high electricity price following Iberian exception on Wednesday: €436.25/MWh

The average wholesale cost of electricity in the PVPC regulated market will be €436.25/MWh on Wednesday, the highest since gas prices were capped two months ago following an agreement between Spain, Portugal, and the EU known as the Iberian exception.

This is a 19.4% increase on the previous post-gas cap record set on Tuesday at €365.33/MWh. It is also the first time average prices surpass €400/MWh since March. 

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.