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The cap on gas contained the escalation of electricity by around 20% in its first month of validity | Economy

A client makes numbers with the electricity bills of his house.
A client makes numbers with the electricity bills of his house.Aitor Sol

After a disappointing start, the Iberian exception is beginning to bear fruit. The cap on the price of gas used by combined cycle plants to generate electricity reduced the cost of electricity for customers in the regulated market —also known as PVPC— by between 17% and 22% compared to what would have happened without that mechanism. The range is based on two calculations: the lowest is that of the Association of Electric Power Companies (Aelec, the industry employer), while the most optimistic comes from the model of three Economics professors at the Complutense University of Madrid ( UCM): Raphael Salas, Miguel Sherry Y Francis Alvarez. Despite the differences, in both cases the conclusion is similar: a domestic consumer covered by a regulated rate would be paying around a fifth more for electricity (charges and tolls aside) than what they are paying with the measure.

The objective of the cap on gas is basically to eliminate the contagion of the high prices of this fuel on the rest of the market. Y, roughly, it can be said that it is fulfilling its purpose: this is clear, for example, from the comparison with the rest of the large European electricity markets, which points to a disconnection between Spain —a traditionally more expensive country— and countries such as France or Germany. Since last June 15, the first day of application of the Iberian exception, the Spanish wholesale market has been around 250 euros per megawatt hour (MWh), cap included, compared to 270 in Germany, almost 330 in France and almost 360 from Italy. In all cases, these are figures that were unimaginable just a year ago.

“Customers in the Spanish regulated market have not yet seen what they pay drop due to the other factors surrounding the price of electricity, but what is clear is that the situation would be substantially worse than without the gas cap. That is the main conclusion of our study”, says Salas. The Government promised that the system, unprecedented in Europe, would lead to a reduction of “between 15% and 20%” in the price of electricity paid by customers with the PVPC rate in the 12 months in which it will be in force.

The range of factors that affect the percentage of savings is enormous. The mechanism, for example, works best when demand is low and renewable generation is high: that is where it brings out its full potential. “This is making the advantage much more noticeable on weekends, for example, when the discount reaches over 30%,” explains José Luis Sancha, professor at the Higher Technical School of Engineering (ICAI) of the University Comillas Pontifical.

The reference to evaluate the effectiveness of the gas cap “must be twofold: both the price we would have without a gas cap and what is happening in the other European countries, which do not have this mechanism,” according to Francis Valverde, expert in the electricity market and consultant for Menta Energía. “Spain has traditionally been in the group of the most expensive countries, along with the United Kingdom and Italy. And that has changed now: without the cap we would be more or less like France, and with the cap we are more than 20% below”.

The problem, Valverde considers, is that the rise in the price of gas in the European market – which has returned to the maximum zone: 180 euros per MWh, one step away from the peak of 200 that marked just after the start of the war – “It has cannibalized everything: people expected a reduction in the bill [respecto a los niveles previos] and there is not, but what is clear is that we are paying much less than what we would be paying without a gas cap”.

As for the nearest future, the also author of the book Presumes to understand (thoroughly) electricity and gas bills The mechanism is expected to look a bit brighter in August due to lower industrial activity, which will put downward pressure on demand. “Older, less efficient combined cycle plants should run less, and that should drive prices down,” he explains over the phone. This Wednesday, the use of combined cycles marked a new all-time high in Spain, with demand triggered by the heat wave (more air conditioning) and exports to France (the cap on gas causes the sale of electricity at abnormally low prices to the neighboring country).

Disaster of cogeneration

In order to limit the impact on generation plants that limiting the price of this input entails, the Iberian exception contemplates compensation for combined cycles. This adjustment, however, does not apply to cogeneration plants: thermal plants attached to industries of all kinds (from food to tile) that generate both heat and electricity and sell their surpluses to the system. The cap on gas, however, has left them out of the game: the contribution of these plants to the entire electricity system has been halved, and many companies that have made large investments in these facilities in recent years are suffering Now to redeem them.

Before the cap on gas, cogeneration had been contributing around 11% of the electricity consumed in Spain; now hovering around 5%. Much of this gap left in the market has been covered by the oldest combined cycles, which have significantly higher operating costs than modern ones. This situation has put the bosses of the sector on a war footing, the Spanish Cogeneration Association (Acogen), which last week asked the European Commission for “protection” and “urgent action” to “not be discriminated against.” The solution, they claim, is that the same gas prices be recognized as for the cycles.

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