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Electricity prices reach new highs as temperatures soar in Spain

Europe Materials 14 August 2021 00:47 (UTC +04:00)
Electricity prices reach new highs as temperatures soar in Spain

The average price of electricity climbed to record high in Spain, amounting to 117.29 euros (138 U.S. dollars) per megawatt hour (MWh). It was the fifth consecutive day with a sharp increase in electricity prices, surpassing the 115.83-euro/MWh price recorded on Thursday, Trend reports citing Xinhua.

The steady price hikes coincide with a heatwave which has seen temperatures rise to around 40 degrees centigrade in the capital city of Madrid and other major cities such as Zaragoza and Seville and expected to reach 45 degrees centigrade in some parts of the southern region of Andalusia over the next 48 hours. Year-on-year, the price increase has been around 190 percent.

Hot weather, however, is not the only factor to blame for this. The price of greenhouse gas emission credits used in the European Union (EU) Emissions Trading Scheme has been rising due to continued tightening of the supply side of the scheme, and energy companies tend to pass on the costs to their consumers. Some energy producers have also been speculating with the price of energy by limiting the production of hydro-electric power.

The Spanish government of Pedro Sanchez has lowered sales tax on electricity to 10 percent in a bid to protect clients from the price spikes, but that does not handle the root cause of the problem.

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