Price of electricity falls by almost half on Wednesday

The price of electricity in Spain will fall by nearly 50% on Wednesday compared to Tuesday. 

Energy costs on December 8 will average €108.73/MWh, down from €211.81/MWh seen the day before. 

2021, especially the second half of the year, has seen wildly soaring prices, with plenty of all-time highs seen. 

October 8 stands as the highest average price ever recorded, at €288.53/MWh. This is followed by the more recent date of November 30, which saw costs jump to €274.5/MWh.

In the two months following the summer, costs increased by over €100, with 19 record-highs since from mid-July. Before this period of price hikes, the prior all-time high was seen in January 2012 at €103.76 per MWh.

Comparing these figures to December 2020, the price of electricity has almost quadrupled in the last 12 months. 

On December 8, 2020, electricity cost just an average of €27.48/MWh, far from the price of €108.73/MWh seen one year later. 

Reasons for soaring costs

Attributed to the rising cost of the gas used by combined cycle power plants as well as carbon emission trading and the limited use of renewables, electricity is now much pricier than it was a year ago when prices decreased following a drop in demand during the height of the pandemic.

Experts warn that soaring prices are not going away any time soon. José Bogas, CEO of Endesa, the largest electric utility company in Spain, said in an interview that high prices will remain until the second quarter of 2022.

According to him, this phenomenon is neither the government's nor the companies' or the customers' fault. He argued that the same trend is happening across Europe, but that it was "slightly" greater in Spain during the summer due to the use of air conditioning.

Bogas is not alone in believing prices are here to stay, for now. "We have to get used to seeing these prices until the end of the year," Marc Bonet, who is in charge of business development at Barcelona Energia, told the Catalan News Agency.

Changing behaviour to save on bills

Around 67% of Catalans have said they have modified their behaviour at home in the past months as a result of the ever-increasing prices according to a study carried out by the insurer Mutua de Propietarios. 

Five out of ten people believe that the electricity bill has increased with the tariff change and have therefore adopted new habits such as avoiding consumption at rush hour (53% of respondents), changing the hours they use appliances (52%), or use energy-saving modes on their appliances (18%), among others. 

However, only 25% believe that their changes are effective, while 68% believe that they have lowered the electricity bill by "little or not at all."

Electricity bills have risen by an average of €14.77, according to the study.

Meanwhile, authorities are unable to stop the rising trend, as experts say encouraging renewables through legislation would contribute to lowering the bill.

'Lack of transparency’ from some companies

The new tariffs came into force on June 1, with higher, middle, and cheaper rates.

Spain's competition regulation authority (CNMC) expressed concerns that some companies made the most of these changes by raising prices by up to 30% more than what the tariffs allow without warning their customers.

CNMC denounces a "lack of transparency" of several companies – whose names have not been revealed – and calls for those affected to be compensated.