August becomes the month with the most expensive electricity in history despite the Iberian exception

In a summer marked by the escalation of European energy markets, the month of August will say goodbye this Wednesday as the month with the most expensive electricity since there are records in Spain, with a average price of 308 euros/MWh in the wholesale market, which in turn triggered the bill paid by consumers.

The 307.81 euros/MWh recorded on average in August – according to data provided by the Market operatoro Ibérico de Energía, OMIE- exceed the previous historical maximum of 283.3 euros/MWh, recorded last Marchshortly after the start of the Russian invasion of Ukraine.

The historically high values ​​that mark the European energy markets, mainly electricity and gas, are produced following the war conflict in Eastern Europe and the consequence punishments imposed on Russia, which anticipates a winter of energy instability on the Old Continent due to fears of a possible total cut in Russian supplies.

Without the Iberian exception, the average price for August would be 377 euros

The new record recorded in August is reached as the so-called “Iberian exception”which despite the limitation of the price of gas until mid-2023, did not prevent this summer from being the most expensive in history.

However, this mechanism, which fixes a maximum price for the gas used for the production of electricity, serves as a brake to prevent prices from being even higher and keeping them comfortably below the values ​​set by the main European economies.

Thus, the average price for August if the gas cap had not been in effect would have been €376.7/MWh. In this sense, if we take into account the average price since June 15, the date on which this mechanism came into force, electricity reaches 274.83 euros/MWh, compared to the 328.35 euros/MWh which would have been scored without this gas cap, 16% more.

Below the European average

Despite the fact that in the last eight days of August there was six out of ten the highest prices in the historical series, the Spanish wholesale market remains below the levels set by the main European economies.

While in Spain it has almost exceeded 308 euros/MWh in the last month, both in Germany and in Italy, economies traditionally more dependent on gas, and in Franceaffected by the poor performance of its nuclear reactors, the average price is around 500 euros/MWh.

The highest price was recorded in Italywith an average of 543.15 euros/MWh, reaching more than 700 euros in four days, and 600 euros in nine days in total.

Behind there was Francewhere half of its 54 nuclear reactors are currently shut down due to refueling processes or corrosion problems in the cooling circuits, with an average price of 492.48 euros/MWh, reaching a record high of more than 700 euros.

the price in Germany It was a little lower, with 465.18 euros/MWh, although it was sometimes around 700 euros, and the average is 51% higher than the price recorded in Spain.

Behind the escalation of the electricity markets lie mainly the rise in gas prices, which infects the electricity market. It has been at record highs for weeks.

To combat this critical situation, the European Union (EU) has opened the door to “emergency intervention” and structural reform of the electricity market. The reform, demanded for more than a year by the Spanish government, would stop “the vertiginous increase in prices”, which “reveals the limits of our current conception of the electricity market”, according to the President of the European Commission, Ursula von der Leyen.

Electricity bill

The main victims of this situation remain the consumerswhich in Spain will pay one of the highest electricity bills since there are records.

Thus, for a typical consumer in the regulated market, and according to the electricity bill simulator of National Markets and Competition Commission (CNMC), with a subscribed power of 4.4 kW and a monthly consumption of 250 KWh, the bill for the month of August will be around 113 euros.

This figure is the second highest on record, just behind the 123.09 euros since last Marchat the very beginning of the Russian invasion of Ukraine, and is 66% higher than the amount reached during the same month of 2021, in addition to doubling the pre-pandemic values.

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