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By G. Uth – 27. October 2021 – 

Electricity prices keep breaking records. What can we do about it?

Since June 2021 Spain (and the rest of the world) have experienced soaring electricity prices, and it doesn’t seem

to stop. The rise in the energy prices is due to a number of factors such as rising gas prices and rising CO2 prices caused by drastic (but necessary) international political objectives on limiting the emission of CO2 and, of course, the usual pressure on the supply caused by increasing demand across the Globe.

But most detrimental factor causing these crazy prices, especially in Spain, is the way electricity exchange markets calculate the average price that electricity suppliers have to pay for the electricity.

Very briefly explained, the average price the electricity suppliers pay, is actually calculated by the last price in the process to fulfil the markets requirements, which in most cases are fossil energy sources, such as gas, oil or carbon, which we all know are the most expensive energy sources on the market, because the sources produce a lot of CO2 while being generated.

The average day-ahead price which is calculated by the exchange markets are the prices of these source, although the REAL average price is a lot less. So, to put that in to perspective for you, a nuclear plant that is generating electricity at let’s say 30€ per MWh is right now charging between 300 and 400€ per MWh.

Approximately 1000% gain…yes, that’s right, one thousand percent!!!

All energy generators not generating CO2 from their production are having the biggest “fiesta” of their lives. And the end-user is paying, because there is no real political willingness to change the way the electricity market works. We have to keep in mind that the governments are making big bucks on the high electricity prices as well, as taxes are calculated on money, not consumption of MWhs.

Now do you see where all your money goes?!!

There seems to be no end of the rise in electricity prices and prices in the futures.

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But remember: it’s just a rule of thumb!

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