Rising gas and electricity prices will cost Spaniards 9 billion

BarcelonaThe energy transition has a cost and Spanish consumers are noticing it. Despite the increase in electricity generation from renewable sources – wind power led to electricity generation in Spain last year – in 2021 prices skyrocketed. According to Omie, the operator of the Iberian electricity market, the average for the year in the wholesale market stood at 111.93 euros per megawatt hour (€ / MWh), with a sharp peak in the last months of the year. An average price that is a historical record and which is 229.5% more than the previous year, which, however, was marked by historically low prices due to the pandemic.

But if the comparison is made with 2019, the average price of electricity in 2021 in Spain was almost 135 higher, and compared to 2018, the year in which the executive of Pedro Sánchez was set as a reference when he promised that the Spaniards would pay no more in their bill than that year, he practically doubled. The Spanish government has created a shield with tax cuts to try to lower the bill to consumers, which has been extended until April, but the bill has been increased for citizens. According to the Organization of Consumers and Users (OCU), the Spanish government’s measures “have failed to reduce the price of electricity or slow down the increase in bills.” In addition, futures markets indicate that the price of electricity will continue to rise in the coming months and have reached prices above € 400 / MWh.

The causes of the rise in the price of electricity are known: the rise in the price of gas, the rising cost of CO2 emissions, and a marginalist market in which the latest technology to enter, gas , which is the most expensive, sets the price. The emission rights for each tonne of CO2 were on average in 2020 of 24.75 euros, in 2021 they were almost double, 53.55 euros per year on average, but with an upward curve that made them close in December to more than 79 euros on average. The impact of the price of gas, which is used in combined cycle power plants, was even stronger. In the first session of the Spanish Mibgas market in 2021, the price in euros of MWh of gas was 31.78 euros. A year later it was 85 euros.

The rise in electricity prices has also come in a year in which electricity consumption has risen compared to 2020, when confinement put an end to economic activity, but which is still below prepandemic levels. Electricity demand in Spain in 2021 was 256,462 GWh, 2.6% more than in 2020, but 3.1% lower than in 2019, according to data from Red Eléctrica, the company that operates the system.

Calculating, however, the impact of rising electricity prices on consumer bills is not easy. Bank of America has carried out a study on when it will cost Spanish domestic consumers to increase electricity and gas: 9 billion euros. The institution has made its estimate by comparing the prices of 2021 with those of 2020. According to the investment bank, for all European countries the impact of the rise in the price of electricity and gas will have cost about 107,000 million euros.

Despite the 9 billion extra cost, according to the bank, Spain is not the worst-off state, noting that in the United Kingdom it will rise to 27.7 billion euros, while in Italy it will be 24.5 billion euros. Germany 23 billion and France 22.1 billion. There will only be a smaller impact than in Spain in Portugal, with about 700 million euros.

Bank of America expects a price increase of about 475 euros per year for each of the 19 million Spanish households throughout 2022. If the measures approved by the Spanish government are extended throughout the year, the impact would be reduced by a third and the increase would be 170 euros per household, between 3,000 and 4,000 million for all consumers in the state. The executive extended until April 30 the reduction of taxes included in the electricity bill paid by all consumers to alleviate the negative effect that the rise in the price of electricity is causing to citizens. Specifically, the reductions from 21% to 10% of VAT and the excise tax from 5.1% to 0.5%, which is the legal minimum, were extended until April 30. However, the suspension of the 7% generation tax paid by companies will only be maintained until March 31.

More renewable

In 2021, electricity generation from renewable sources reached historic highs. 46.6% of electricity was from renewable sources, compared to 44% a year ago. And wind power took a special place, as it was the first source of electricity production in 2021 with 23.3%, so that it surpassed nuclear power, something that has not happened since 2013. In addition , photovoltaics gained weight (8% in 2019 by 6.1% in 2020). For Beatriz Corredor, president of Red Eléctrica, these data show that “Spain is making good progress in its process of ecological transition”.

Source: Ara.cat – Portada by www.ara.cat.

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