Electricity price breaks 200 euros record - The price of electricity will break records again tomorrow and is approaching Wednesday to 200 euros per megawatt hour, 5 times more than a year ago.

The price of electricity in the wholesale market will beat a new record on Wednesday and will be 5 times more expensive than just a year ago, up to 189.9 euros per megawatt hour.

The amount for the MWh will be this Wednesday of 208.47 euros in its most expensive section, between 20.00 and 21.00 hours, and the cheapest between 3 and 4 in the morning, when it falls to 167.01 euros, according to data from the Operator of the Iberian Energy Market - Spanish Pole (OMIE).

The months of July, August and September are the most expensive in history, with a succession of records that have been broken almost every week.

The importance of the rise is better taken into consideration if we look at the price that marked the light last year at this time, when it was about 43 euros.

Electricity price breaks 200 euros record

The forecasts of the experts indicate that the price of electricity will begin to fall from March 2022.

The rise is being produced by a global shortage of raw materials involved in electricity generation, such as gas, oil or coal, which causes the use of cheaper and polluting alternatives, resulting in an increase in the prices of CO2 rights.

The Government has recently approved a shock plan to try to mitigate the impact of this context on the final amount that the consumer must pay for his electricity bill.

Electricity price breaks 200 euros record

The executive led by Pedro Sánchez first reduced VAT from 21% to 10% and then suspended the 7% tax on electricity generation.

Sánchez announced in an interview on RTVE on the occasion of the start of the political course that he would add new measures to try to lower the bill.

He pointed to a discount of the electricity tax to the minimum set by Community legislation, 0.5%, and pointed to a reduction in the profits of electricity companies with which it is estimated to contribute in about 2,600 million euros to reduce the impact of the rise.

Electricity price breaks 200 euros record

More news:

Electricity will not recover its usual price at least until 2024, according to one of Europe's largest gas operators

It was already expected that the current electricity crisis would last several months, at least until spring 2022 if one pays attention to the data that have marked the gas futures markets on the continent. But now it is known that, in addition, electricity will not recover market values around 60 euros per megawatt / hour (MWh) —its price in 2018— until 2024.

This is expected by analysts from Axpo, one of the largest electricity operators in Europe and the second largest gas operator in the continent, according to El Confidencial.

The forecasts of Domenico de Luca, head of Trading & Sales of the Axpo Group, coincide with those shared by energy experts over the past few weeks. The daily price of electricity in the last months of 2021 and the first months of 2022 will remain as high as this September across Europe.

The ninth month of the year is pulverizing records practically every week: the average price is around 170 euros per MWh, according to data from the Operator of the Iberian Electricity Market (OMIE).

As usual in these analyses of electricity prices, experts point to gas and coal as the main culprits for this historic escalation in Europe.

The price of coal has risen 70% this year, gas in Europe on Monday again reached historic highs and the prices of CO2 emission rights of the European Union have exceeded 65 euros on Tuesday; another figure never before seen.

But the worst may be right around the corner. According to Citygroup analysts consulted by Bloomberg, the price of natural gas could reach 100 dollars per MMBtu this winter. This would mean that the MWh would be catapulted to 300 euros in the coldest phases of this winter.

De Luca has warned of "serious problems if an especially cold winter comes". Considering that the very high demand for natural gas in Asia will continue and that Russia's refusal to supply more to the European market, at least until NordStream 2 officially opens, adds to the growing European demand, electricity prices this winter may continue to rise.

Citygroup analysts have calculated that this crisis will result in a 20% increase in the average price of the household bill in Europe.

Households are not the only ones suffering from high natural gas prices. Some industries that need to use natural gas for their production are also being seriously affected.

Gas is necessary for the manufacture of ammonia, very present in the European industrial fabric with a multitude of applications for various sectors such as the automobile or textile, although it stands out for its usefulness in fertilizers.

Several companies, such as Norway's Yara International, have announced that they are reducing or even stopping production at several of their plants due to gas prices. In a statement in mid-September, the engineering company has detailed that in total it reduced its ammonia production capacity by 40%.

Food production could be affected if the cost is, in turn, passed on to these producers. An increase in product prices could generate a domino effect that would affect inflation.

More promising prospects for the medium term. The data shared by El Confidencial suggest that the decrease in the price of electricity will begin to be noticed from 2023. By then, the MWh would drop to 65 euros.

Already in 2024 would be when pre-crisis prices would recover. The gradual entry into operation of renewable energy generation projects will lower the average price of electricity.

The strong investments made by Spain over the years towards renewable energies would have their fruits by the year 2030. Due to the structure of the current European electricity market, Spain would then become the country on the continent with the cheapest electricity: 40 euros/MWh.