Is self-consumption the solution to the rise in electricity?

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Is self-consumption the solution to the rise in electricity?

Is self-consumption the solution to the rise in electricity?


Energy Lumisa Sector Consumption Self-consumption Bills 6


The electricity price data for the month of June are historic: each Spanish household in the wholesale market will have paid almost 83 €/MWh in its electricity bill on average, although bills can rise to more than 100 euros. But why is self-consumption the best option for this problem? In today's article we are going to find out.

Why did the price of electricity go up in June?

The price of electricity has skyrocketed compared to the standards we are used to in a typical month of June, which is around 71.50 euros. The 83 euros represents a 270% increase in the price of electricity in the month of June 2021, which means an increase of almost 30% in the electricity bill compared to the same month in 2020.

The fact that electricity prices were going to rise was a certainty since Decree-Law 1/2019 of 11 January was passed, although this is not the reason for the current increase in the tariff. The data offered at the beginning of the article is a trick, as the explanation is to be found in the drop in demand last year due to the paralysis of the economy due to the pandemic of covid-19.

The price of natural gas on the European market rose by 400% in May compared to 2020, while the price of CO2 emission allowances has risen by 100% in half a year.

The explanation, then, can be found in two other factors. The first is the increase in the price of gas on international markets, the second is the increase in the price of CO2 emission allowances, which is remarkable, as fossil-fuelled energy only accounts for 25% of electricity generation in Spain at present.

Who decides the price of electricity?

This rise in electricity prices in the pool, regulated by OMIE (Operador del Mercado Ibérico de Energía), which is part of the European markets, and the most common market that sets the price for the following day based on supply and demand. This means that Red Eléctrica estimates the demand for electricity in Spain for the following day and the companies that generate electricity make their bids based on this. Afterwards, bids are made to allocate the electricity packages until all the demand is covered. Each bid that is submitted is higher than the previous one and the final price is set by the last one submitted and is the value that will be paid to the generators.

OMIE manages the pool in Spain and Portugal and the hourly price of the daily electricity market for the following day can be consulted on its website.

In response to this barbaric rise in the bill, the Council of Ministers announced a reduction in IVA from 21% to 10% in the electricity sector for the most vulnerable households, with less than 10 kW of contracted power and if the MWh does not exceed 45 euros, until at least the end of this year. The elimination of the 7% tax on electricity generation was also approved with the same objective.

Despite this, the OCU (Organización de Consumidores y Usuarios) has asked the CNMC (Comisión Nacional de los Mercados y la Competencia) to intervene in the matter because the measures are insufficient for a large part of the Spanish population.

Why self-consumption is a good option?

As we have seen in previous publications, the installation of solar panels is very quick and the investment is recovered in the medium term, as well as not contributing to the emission of greenhouse gases and making your home self-sufficient in terms of electricity.
However, the most remarkable thing in relation to the current rise in the price of electricity is the possibility of not being dependent on variations in the grid, such as the one we experienced in June. At Lumisa we offer the possibility of taking advantage of the simplified compensation tariff to take advantage of this capacity offered by the Spanish market. Consult our tariffs or access the simulator to find out what the initial investment would be for the installation of the self-consumption system.

Although the initial investment may seem high, there are numerous discounts that can reduce it by up to 50%, as well as tax rebates that aim to encourage Spanish society to opt for the "home" generation of electricity through photovoltaic panels.

Sources:

  • RJ Consultors
  • Público
  • The Conversation
  • El Periódico
  • ABC
  • El Periódico de l'Energia

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