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Electricity price increase in July

by PREMIUM.CAT
una vista de la posta de sol d'un camp amb línies elèctriques i una línia de pals elèctrics a la distància amb una posta de sol a la distància, Évariste Vital Luminais, cables, una foto d'estoc, regionalisme

High temperatures drive the rise in electricity costs

The month of July ends with a series of notable increases in the price of electricity. Demand has experienced an increase due to the high temperatures of the first full month of summer, creating great pressure in the wholesale electricity market and reaching annual peaks with days that are around 100 euros per megawatt hour (MW/h).

This weekend seemed to announce a possible decrease, with two consecutive days where the Iberian Energy Market Operator (OMIE) reported a significant drop, reaching 30 euros per MW/h. However, this relief was short-lived, as early projections for next Monday indicate a sharp increase in costs. According to OMIE, the price of a megawatt hour will increase by 161% in a matter of hours, reaching a daily average of 79.53 euros, with a maximum that will exceed 133 euros between 9 and 10 p.m.

The week begins with historic increases

The week starts recovering the high costs that have been characteristic of the month of July. In fact, both last Thursday and Friday the average price exceeded 100 euros, something that had not been seen since the beginning of the year. The first waves of extreme heat in the country have interrupted the stability of the year 2024. During the central weeks of spring, numerous days with negative prices were recorded, especially in April, when the production of renewable energy almost completely dominated electricity generation from the country. In contrast to the current indices, the second quarter of the year began with a monthly average of 13 euros, far from the more than 64 euros recorded in the month of July until the 21st.

Impact of photovoltaic production

According to the ASE Group, a specialized consulting firm, the increases in the price of electricity in July could be even greater. Photovoltaic generation has been the main moderator of this trend, covering up to 50% of the country’s total demand during the central hours of the day, and has even managed to reduce costs compared to the June highs.

Weather forecast and its effect

However, the last days of the month could be more tense. Weather forecasts indicate that wind generation could decrease due to predominantly summer weather, with high temperatures and little wind. This phenomenon, combined with increased demand during episodes of extreme heat, could trigger a new rise in prices.

Limited impact on end consumers

Despite these increases, new calculation methods introduced this year mean that the price on the wholesale market does not directly translate to costs for end users, especially when it comes to regulated tariffs. The so-called Voluntary Price for Small Consumers (PVPC) incorporates a combination of medium and long-term prices to mitigate the effects of market fluctuations on consumers, particularly the most vulnerable.

In this way, the daily price of the wholesale market will represent less and less of the final bill for consumers, reducing its weight to 45% of the total from 2026.

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