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Why doesn't the price of electricity stop rising?

Why doesn't the price of electricity stop rising?


Find out why the price of electricity keeps rising, how it is calculated and what you should do to save

Thanks to industrial self-consumption we can obtain savings of more than 75% on the electricity bill, something very important for a company in these times. In this article we explain why the price of electricity is rising so much and the advantages of solar energy.

Why is the price of electricity going up?

The price of electricity has risen spectacularly in the last year. The companies find themselves with a price of around 400 euros per megawatt hour (MWh). These rises are caused by natural gas, which is used to generate electricity through combined cycle gas plants, especially during peak hours with greater energy demand.

And why is the price of gas going up? The coronavirus pandemic has created a mismatch between demand and supply, and the economic recovery, in addition to the increase in demand in China, have sent prices soaring. Antonio Turiel, a scientist at the CSIC, affirms that the problem is deeper, since the exporting countries have reached their production peak, and the current conflict in Ukraine heralds bad times for the wholesale markets.

For its part, from it is explained that gas does not always set the price, and that when energy demand is covered by hydroelectric power plants, energy created with water, the price of a megawatt is still well above of its generation cost. This happens, they say, because there is a problem of diversity of production, since only three large companies generate more than 60% of the electricity that is sold, not to mention that they also sell electricity to more than 80% of customers.

If you want more information about the electricity price history, you can follow the following link:

How and who calculates the price of electricity?

The price of kWh varies according to the supply and demand of the companies that are dedicated to this item in the OMIE (Operator of the Iberian Electricity Market) You must bear in mind that for some plants this resource is not storable or its storage is not profitable, that is, they sell their electricity at a very low price, but since it is a marginal market, the energy that ends up covering demand with supply, which must be the most expensive, is the one that sets the price of the rest, as they explain from

What are the factors that determine the price of electricity?

The price of electricity depends on several economic, meteorological and consumption factors.
  • Economic: the variation in the daily market of raw materials such as gas, oil and coal.
  • Meteorological: periods of drought and scarcity of wind or sun affect the production of electrical energy for wind or hydroelectric plants.
  • Consumption: the increase in electricity consumption in summer or winter periods due to the use of air conditioning or heating are high peaks that will be reflected in the billing.
What are the advantages of industrial self-consumption for companies?

Among the advantages of industrial self-consumption through solar energy for companies are the following:
  • Companies no longer depend on the ups and downs of the electricity market.
  • Solar energy is free, and with the repeal of the misnamed “sun tax”, self-consuming companies will not have to pay a special tax for using this energy.
  • Thanks to tariffs with hourly discrimination, companies will be able to obtain a more expensive price per kWh during the hours in which they use only solar energy, and enjoy a lower price when they actually use the electricity grid.
  • Self-consuming companies will be able to pour surplus production into the electricity grid in exchange for a discount on the electricity bill.
  • Solar energy is clean, so they will be able to meet European demands on sustainability.
  • Companies may share the benefits of a solar panel plant with a third company or rent their solar park.
If you want more information about the price of electricity, you can consult the following link, in order to have a broader vision on this subject.


Àliter Group

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