Spain has come to pay for consuming energy, marking a historic milestone of -10 euros per megawatt hour (MWh) on any given Sunday. Red Eléctrica data shows days where photovoltaic solar energy reaches more than 63% of the generation at times of maximum radiation, which is an undeniable success for our electrical system.
And yet, this summer the electricity bill It will be almost 30% more expensive than last year. To understand how both things can be true at the same time, you have to understand what happens between the solar panel and your bill.
The 41% you see and the 59% you don’t see. You look at the market price and think you understand your bill. You don’t understand her. That price—the one making the headlines, the one that hit negative numbers on Sunday—represents 41% of what you pay. The rest is a whole edifice of tolls, system charges and taxes that doesn’t appear on any headline but does appear on your bill each month.
And here comes the most ironic trap of this entire story. The massive deployment of wind and solar achieved something that seemed impossible five years ago: moderating national inflation to 3.2%. An indisputable macroeconomic victory. However, that victory had a side effect that no one celebrated since by not exceeding the legal limit for price increases, the “deactivation clause” of the Government’s anti-crisis decree was automatically activated. The renewable shield worked so well that it disabled its own aids. From June 1, VAT on electricity and gas returns to 21%.
During the day, renewable. At night, gas. And always, the invoice. During the day, Spain operates with almost free energy: an average at noon of just 1.65 euros per megawatt hour. The sun covers 67% of the demand for six hours in a row. The electrical system, in those hours, is an extraordinary machine.
But as night falls, the story suddenly changes. Water covers only 21% of the demand. The wind, barely 13%. As Antonio Aceituno points outenergy market analyst at Tempos Energía, electricity at night costs 57% more than at midday. This is when the gas and coal plants have to be turned on again. And that nighttime lighting is what sets the tone for your receipt.
With the arrival of summer, the equation worsens on all fronts. High temperatures reduce the efficiency of solar panels. Air conditioning triggers demand. The hydraulic shield gives way. And the geopolitical panorama is tightening from the outside: despite the pre-peace agreement between the United States and Iran to unblock the Strait of Hormuz, gas travels by ship and those LNG tankers They will not arrive in Europe before August. With European storage stagnant at 37%, Tempos Energía predicts that electricity in the third quarter moves between 82 and 86 euros per megawatt hour. If the pact fails, above 90. 35% more expensive than the previous summer.
The market that moves 7% in one afternoon without anything happening. Behind the price of electricity there is another layer that almost no one explains: the European gas market – reference TTF – works, in practice, like a casino. As energy expert Joaquín Coronado describesis a machine designed to transfer volatility to the end consumer. In a single recent session, the index moved more than 7% intraday without any real event to justify it. Only speculation of financial funds.
And here comes the paradox that Coronado points out precisely: more than 75% of the energy negotiated in Spain already goes through bilateral contracts, at an agreed price, outside the speculative market. Three out of every four megawatts, shielded. But that remaining 25%—the one that is played every day in the marginalist market—is what sets the price of your entire bill. The minority rules over the majority.
Added to this is a dysfunction that comes from the factory in the system design: Spanish demand is inelastic. When electricity shows ridiculous prices at midday, consumers do not react by consuming more to take advantage of the bargain—because they have no real incentives to do so, no smart meters that facilitate it, nor rates that reward it in real time. By not absorbing this excess of cheap energy, agents from France and Portugal end up buying it to export it. And that export, due to the dynamics of European coupling, drags our prices up. We give away the energy and they return the European price to us.
Incomplete success. Spain has achieved an indisputable structural feat. We have become a European pioneer by decoupling, for much of the day, our electrical system from the worst international whims of gas, gaining valuable energy independence.
However, the transition does not end with installing solar panels. As long as the sector continues to be immersed in internal wars blaming each other, as long as the grid lacks a massive battery system to store megawatts at zero cost and as long as the tax structure continues to suffocate the family bill, cheap electricity will continue to be a mirage on the screens of the financial markets.
We generate almost free light at midday, yes, but the labyrinth that that energy runs through until you turn on the plug in your house we will continue to pay at the European luxury price.
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