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ELECTRICITY

Electricity prices soar as temperatures plummet

Electricity prices in Sweden continue to rise in the wake of the prolonged spell of subzero temperatures across much of the country.

Published: 7 January 2010 17:04 CET

The price for a kilowatt hour (KwH) has risen sharply on the Nordpool power exchange, while Swedish state-owned national electrical grid operator Svenska Kraftnät is warning of a strain on the country’s energy resources.

On Monday, the kilowatt hour spot price was around 70 öre ($0.098) per KwH on the Nordpool exchange. By Friday, the price is expected to be be around 304 öre(KwH), the highest price of the year.

The sky-high prices have come as a blow to Swedes with variable-rate electricity agreements.

However, Sigge Eriksson, head of power provider Vattenfall’s private market division, told the TT news agency on Wednesday that customers shouldn’t focus too much on high spot prices for any specific day.

“In December we had higher prices and then we had this high point of 261 [öre/KwH], but the following day prices fell,” he said.

“I don’t have statistics for all of December, but the effect was that the average price ended up at around 50 öre.”

The long stretch of cold winter weather has also affected Sweden’s overall energy consumption.

On Thursday afternoon, the country used about 25,400 megawatt hours (MwH) of power.

Usage between 5pm and 6pm on Friday is expected to climb to 26,600 MwH, prompting warnings from Svenska Kraftnät about strains on Sweden’s power system.

The grid operator has already dipped into its reserves in order to ensure a margin of 1,000 MwH in case of an unforeseen event.

“Tomorrow (Friday), the margin is going to shrink because of the high energy consumption, but we’re still a long way from an energy deficit,” Svenska Kraftnät spokesperson Maria Jäderberg told TT.

She said that, at the moment, there is no need for the grid operator to ask the parties with which it has energy contracts to lower their energy consumption.

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ELECTRICITY

KEY POINTS: How will Spain tackle rising electricity prices?

On Tuesday, the Spanish government approved a raft of measures to help reduce the ever-increasing electricity bills that those in Spain have been facing in recent months. Here's how they plan to do it and what measures will be in place going forward.

Published: 14 September 2021 18:13 CEST
KEY POINTS: How will Spain tackle rising electricity prices?
How the Spanish government plans on reducing electricity bills. Photo: Michael Schwarzenberger / Pixabay

Electricity prices have been rising to record levels recently, with one of the highest prices yet at €172.78 /MWh, expected on Wednesday, according to electricity market operator OMIE. 

Here’s how the government plan on lowering the price of electricity in Spain. 

Prohibiting companies from cutting off electricity for low-income families

The government has approved a new rule which states that vulnerable consumers (families with low incomes) will be able to benefit from 3.5kW of power – sufficient for an average household for six months – in the event that they are unable to pay. This means that the limit at which companies can now cut off the electricity supply of the most vulnerable has been extended from four to ten months.  

Tax cuts

Special tax on electric power has also been dropped from 5.1 percent to 0.5 percent, as promised by Prime Minister Pedro Sánchez during his interview on TVE on Monday. The suspension of the tax on electricity production has also been extended.  

Electricity auctions

One of the most innovative decisions among these new measures is that the government will call auctions in which the large electricity companies such as Endesa, Iberdrola, Edp, and Naturgy will be obliged to sell a percentage of the energy they generate.  

These auctions, which will have a minimum price to guarantee production costs, will be attended by small trading companies and large industries. These companies will then be able to purchase energy cheaper than in the current wholesale pool. Mainly nuclear and hydroelectric plants will participate in this plan.

The government announced that the first auction will be called before the end of the year. 

Putting a cap on gas prices

During the next two quarters, the price of gas consumed by households will not be updated in accordance with market prices.

Third deputy Prime Minister Teresa Ribera explained that a price hike of more than 28 percent for gas in the wholesale market is expected, while on average the regulated rate will rise below five percent.

In addition, until March 31st 2022, the government will tax the profits of the electricity companies, due to the rise in gas prices. They have established a cap of €20 euros per megawatt hour for gas, and when it rises above that price, the extra profits obtained by the companies will be charged a tax that will be used directly to reduce electricity bills.

Maximum and minimum reservoir levels

After the controversial drainage of reservoirs by the electricity companies coinciding with the maximum prices in the wholesale market, the government has decided to set maximum flow levels that can be discharged each month, and minimum levels that must be maintained in the reservoirs.

This prevents an excessive amount of water from being drained. It will be the hydrographic confederations that will set these amounts.

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