Spain continues to burn without brake in full escalation of the price

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The gas shoots up again. In one week it has grown almost 50% and is already above €140/MWh, according to the TTF index. Still far from this winter’s crazy record, but well above just three days ago. A rapid escalation in the price of gas that affects all of Europe and catches Spain just in the first days of application of the gas cap.

Gazprom gets angry and the gas goes crazy. When there are abrupt changes in the price of gas, you have to look at what Russia has done. This week Gazprom has cut its supply to Italy by 15%, as explained by the Italian company ENI. At the same time, the Russian company has also announced a 40% cut in gas shipments through the Nord Stream 1 pipeline.

“The current reports clearly show that the justification given by the Russian side is simply a pretext. It is obviously a strategy to destabilize and drive up prices,” Robert Habeck has forcefully expressed, German economy minister. This Gazprom decision has not taken a couple of days to take effect. The price of gas is out of control again and that winter has not yet arrived.

The gas cap reaches Spain at an inappropriate time. This heat wave should not be normal, but it is here and it is causing Spain’s energy needs to be very high. This is the reason why the cap on gas is not having a positive effect on the final price, according to point from Aelec, the electrical employer.

They defend that the ceiling works, but not much if we compare it with our neighbors. If we look at the price of energy today, Thursday, the cost is in €177.90/MWh according to OMIE. However, to this we must add the cost of the gas cap. A compensation to the gas producing companies that varies every day. Now it is at €88.2/MWh. If added, it gives a total of about 266 euros per megawatt hour. This is below the €275/MWh that we would have if the cap on gas were not applied, as explained today by the Minister for the Ecological Transition, Teresa Ribera.

In comparison, the price in Spain is slightly lower than that in France (€272/MWh) or Italy (€277/MWh). Not so with Germany, where it is at €202/MWh. In other words, according to the minister, the cap on gas contributes to the fact that in Spain we are now paying around 15 euros less per megawatt hour.

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How this gas cap compensation is calculated. To calculate the real price of energy, we now have to count the market auction on the one hand and add this cost of the gas cap on the other. This compensation is the difference between the €40/MWh cap and the price of gas, according to the Mibgas index. Currently at €105.50 and up. The objective of this system is to try to avoid that this difference is also paid in the rest of the technologies, hence the supposed €15/MWh that we will save now.

Gas production in Spain is at record levels. Capping gas has not been accompanied by a reduction in production. On the contrary. The heat wave has boosted demand as people use air conditioning. However, this time there is almost no wind, so the wind power is very low. Solar energy should “pull the car”, but it turns out that whoever is leading production is the combined cycle of natural gas.

For more than 10 years, such a high volume production by gas plants has not been seen, with more than 40% of the total, for about 398 GWh today.

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Gas plants: the main beneficiaries. The gas companies are being the main beneficiaries of this situation. On the one hand, they get the government to pay them for the cap on gas, which due to the situation with Russia is at a very high price. On the other hand, due to the little wind and the inefficiency of solar production, gas has become the most direct option to supply demand.

We are seeing how the direct price of energy has dropped due to the gas cap, but in practice, when adding the cost of compensation, the difference in what we pay as a country is not very far from what it costs our neighbors who they do not have the “Iberian exception”. Along the way, gas companies are benefiting from both direct compensation and the current situation with the heat wave.

Image | Patrick Pleul/DPA Germany

The gas shoots up again. In one week it has grown almost 50% and is already above €140/MWh, according to…

The gas shoots up again. In one week it has grown almost 50% and is already above €140/MWh, according to…

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